SEC Division of Corporation Finance no-action letter: Bank of America Corporation

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

DIVISION OF

CORPORATION FINANCE

December 7, 2010
Russell G. Ryan

King & Spalding

1700 Pennsylvania Avenue, NW

Washington, DC 20006

Re: In the Matter of Certain GIC Brokers (P-O 1118) Bank of America Corporation - Waiver Request oflneligible Issuer Status under Rule 405 of the Securities Act Dear Mr. Ryan:
This is in response to your letter dated December 7, 2010, written on behalf of Bank of America Corporation (Company) and its wholly-owned subsidiary Banc of America Securities'LLC, now known as Merrill Lynch, Pierce, Fenner & Smith Incorporated, as successor by merger (BAS) and constituting an application for relief from the Company beirig considered an "ineligible issuer" under Rule 405(1)(vi) of the Securities Act of 1933 (Securities Act). The Company requests relief from being considered an "ineligible issuer" under Rule 405, due to the entry on December 7, 2010, of a Commission Order (Order) pUfsuantto Sections 15(b) and 21C of the .Securities Exchange Act of 1934 (Exchange Act), naming BAS as a respondent. The Order,

among other things, requires that BAS cease and desist from committing or causing any

violations and any future violations of Section 15(c)(1)(A) ofthe Exchange Act.

Based on the facts and representations in your letter, and assuming the Company and BAS comply with the Order, the Commission, pursuant to delegated authority has determined that the Company has made a showing of good cause under Rule 405(2) and that the Company will not be considered an ineligible issuer by reason ofthe entry ofthe Order. Accordingly, the relief described above from the Company being an ineligible issuer under Rule 405 of the Securities _ Act is hereby granted. Any different facts from those represented or non-compliance with the Order might require us to reach a different conclusion. in~)~~ Mary Kosterlitz Chief, Office of Enforcement Liaison . Division of Corporation Finance

KING & SPALDING
1700 Pennsylvania Avenue, N.W. Russell G. Ryan Washington, DC 200064706 Direct Dial: (202) 661-7984 Tel: (202) 737-0500 E-mail:·rryan@kslaw.com Fax: (202) 626-3737

www.kslaw.com

December 7,2010
By Email and U.S. Mail
Mary Kostetlitz
Chief, Office ofEnforcement Liaison
Division ofCorporation Finance
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Re: In the Matter ofCertain OIC Brokers, SEC File No. P-O1118.
Dear Ms. Kosterlitz:

• On behalfof our client Bank ofAmerica Corporation ("BAC"), we submit this letter to
  request a determination that, for good cause shown, BAC will not be classified as an "ineligible issuer" within the me~ng of Rule 405 promulgated under the Securities Act of 1933 ("Securities Act'.') as a result of a contemplated administrative order ("the Order") to be filed by the Commission. against Bane ofAmerica Securities LLC, now known as Merrill Lynch, Pierce, Fenner &. Smith Incorporated, as successor by merger ("BAS"), abroker~dealer affiliated with BAC.1 We respectfully request that thisdetennination be effective upon entry of the . Commission's administrative order described below. It is our understanding that the Division of Enforcement does not object to the requested determination. BAS has engaged in settlcmentdiscussions with the staff ofthe Philadelphia Regional Office concerning ,a contemplated settlementofthe above-captioned investigation. As a result of these discussions, BAS has submitted an Offer ofS·ettlenieIit which, if accepted by the Commission, would result in the Commission issuing the Order pursuant to Sections 15(b) and 21C ofthe Securities Exchartge Act of 1934 (the "Exchange Act"). The.Order would, among other things, find that BAS willfully violated Exchange Act Section 15(c)(1 )(A) by engaging in certain improper bidding practices involving the temporary investment of proceeds of tax~ exempt municipal securities inreinvtstment products; order BAS to refrain from committing or causing any violations and any future violations of that section; and require BAS to pay r On November 1, 2010, BAS was merged into Merrill Lynch, Pierce, Fenner & Smith Incorporated, an indirect whoIly~owned subsidiary ofBAC that is registered with the Commission as a broker-dealer.

Mary A. Kosterlitz
December 7, 2DlO disgorgement plus prejudgmentinterest in the total amount of $36,096A42. BAS wowd neither admit nor deny the Comm:ission's findings. The Commission's Securities Act ruleS provide substantial benefits to an issuer classified as a "well-known seasoned issuer" ("WKSI"), mcluding the use of a streamlined automatic shelf registration process and exemption from "quiet period" restrictions prohibiting communication during the 30-day period prior to the filing of a registration statement.2 The rules also permit most other issuers to use a "free writing prospectus" after a registration statement is filed to communicate information about a registered offering ofsecurities.3 However, these benefits are unavailable to issuers that are classified as "ineligible issuers" pursuant to Rule 405. Specifically, ineligible issuers ate excluded from the WKSldefmition,and therefore such issuers may not use automatic shelfregistrations or make communications within 30 days priorto filing a registration statement. Similarly~the rules prohibit ineligible issuers from using post-filing free writing prospectuses. . An iSsuer becomeS an ineligible issuer within the meaning of Rule 405 if, among other things, the issuer or any of its subsidiaries is made the subject of an administrative order arising from a governmental action that prohibits futUre violations ofthe anti-fraud provisions ofthe federal securities laws, requires the person to cease and desist from violating the anti-fraud_ provisions ofthe federal securities laws, or determines that the person violated the anti-fraud provisions of the federal securities laws.4 However, ineligible issuer status may be waived if "the Commission determines, upon a showing of good cause, that it is not necessary under the .circumstances that the issuer be considered an ineligible issuer.,,5 The Commission has . delegated to the Division of Corporation ,finance the authority to grant or deny applications requesting that an issuer not be considered an ineligible issuer as defmed in Rule 405.6 Accordingly, BAC hereby requests a determination that, for good cause shown. it should not be classified as an "ineligible issuer" under Rule 405 as. a result of entry ofthe contemplated Commission Order in this case. HAC requests that the Division ofCorporate Finance make this determination for the following reasons:

1. The conduct addressed in the Order does not pertain to activities undertaken by
   BAC or its affiliates inconnection with BAC's status as an issuer of securities (or any disclosure related thereto) <>rin connection with any of its filings with the Commission.
2. BAC and its affiliates have a strong record of compliance with the securities laws
   and have cooperated extensively with the investigation into this matter by the Division ofEnforcement and with parallel investigations by other government 2 See Securities Act Rules 405,163, and 163A, 17 C.F.R. §§ 230.405, 203.J63, and 203.163A. 3" See Securities Act Rule 164, 17 C·.F.R.:§ 230.-164. The rules permit Wi<.SIs to use a free writing prospectus before.a registration statement is filed as welL See Securities Act Rule 163,17 C.F.R. § 230.163. 4 See Securities Act Rule 405, 17 C.F.R. § 230.4Q5. See id. 6 .17 C.P.R. § 200.30-1(a)(10).

Mary A. Kostetlitz

December 7, 2010

agencies and regulators. In particular, the Order will specifically acknowledge BAS's extraordinary cooperation as follows:
"In determining to accept Respondent's Offer, the Commission considered the cooperation of and the temedialactiorts undertaken by R~spond¢nt in {;onnection with the Coinmission;s investigation as well as investigations condllcted by other law enforcement agencies. Among other things, Respondent and its affiliates voluntariiy self-reported the bidding practices described herein to the DOJ; cooperated extensively with investigations conducted by the Commission Staff, the DOJ, artdother law enforcement ~d regulatory entities into these practices; implemented personnel actions artdotherremedial measures designed to prevent recurrence ofthese orsimilar practices; and committed to paying restitution to issuers affected by these practices. the DOJ accepted BAC into Part A of its Corporate Leniency Program, the Department's highest cooperation status."
3. Classifi,cation of8AC as art ineligible issuer would be unduly and
disproportionately severe under the circumstances ofthis case.
4. The Order resulted from substantial negotiations between BAS and the Staffand
its terms were carefuIlydfafted to satisfy the competing concerns ofboth BAS and the Staff. Applying ineligible issuer status to BAC would, in effect, unfairly inflict additionalpunisbment beyond the negotiated settlement to which the parties have agreed in good faith.
5. The Commission has made such a determination for similar reasons in
comparable situations. See e.g., DeutscheBartk Securities, Inc. (June 16, 2009); Bank of America Corporation (June 11, 2009); RBC Capital Markets Corporation (June 11, 2009); 'WachoviaSecurities, LLC (Feb. 26,2009); Knight Capital Group, Inc. (July 1, 2008); Morgan Stanley & Co., Inc. (May 11,2007). In light ofthe.grounds for relief discussed above, we believe that BAC has shown good cause that relief should be granted. Accordingly, we respectfully request that the Division of Corporation Finance make a determination -effective upon entry of the contemplated Order . that BAC is not an "ineligible issuer" under Rule 405 as a result ofthe entry ofthe contemplated' Order. If you have'any qUestions regarding this request, please do not hesitate to contact me at (202) 661-7984 or rryan@kslaw.COm. l::~bL Russell G. Ryan' .