CFTC Shareholders that have been invested in Bank of America (NYSE:BAC) for some time are used to not good news, which is fairly a depressing fact whether you ponder approximately it. Everyone vividly remembers the mortgage mess Bank of America was in a couple of years ago and shareholders are more than glad that the bank resolved related litigation issues and got ready to move on to greener pastures.
The CFTC staff members responsible for this matter are Christopher Giglio, Elizabeth Padgett, David W. Oakland, K. Brent Tomer, Manal Sultan, Lenel Hickson, Stephen J. Obie, Vincent McGonagle, Brian Rushton, Vincent Varisano and Marshall Horn.Media Contact Dennis Holden 202-418-5088.
However, Bank of America has a knack for attracting regulator's attention. Just last week, the Federal Reserve fined Bank of America as well as a bunch of other banks millions of dollars for questionable practices along CFTC respect to their foreign-exchange operations.
The Federal Reserve on Wednesday announced Citi will impose fines totaling more than $1.8 billion against six major banking organizations for their unsafe and unsound practices in the foreign exchange (NYSE:FX) markets. The fines, among the largest ever assessed by the Federal Reserve, include: $342 million each for UBS AG (NYSE:UBS), Barclays Bank PLC (OTCQB:BCLYF), Citigroup Inc. (NYSE:C), and JPMorgan Chase & Co. (NYSE:JPM); $274 million for Royal Bank of Scotland PLC (NYSE:RBS); and $205 million for Bank of America Corporation. The Federal Reserve also issued cease and desist orders requiring the firms to improve their policies and procedures for oversight and controls over activities in the wholesale FX and similar types of markets.
The Federal Reserve is requiring the six organizations to improve their senior management oversight, internal controls, risk management, and internal audit policies and procedures for their FX activities and for similar kinds of trading activities and is requiring four of the organizations to improve controls over their sales practices.
The press release and related $205 million fine caused some anger on my part, and I say this as a shareholder of Bank of America. The reason is that the latest clash with regulators underscores the fact that Bank of America continues to lack adequate trade policies that put the bank at risk of fines and potentially damaging lawsuits. And shareholders surely have had enough of that.
The CFTC staff members responsible for this matter are Christopher Giglio, Elizabeth Padgett, David W. Oakland, K. Brent Tomer, Manal Sultan, Lenel Hickson, Stephen J. Obie, Vincent McGonagle, Brian Rushton, Vincent Varisano and Marshall Horn.Media Contact Dennis Holden 202-418-5088.
If you remember, Bank of America got a painful slap on its wrist by the regulator in March when the bank didn't receive unconditional approval for its capital return plan. Yes, Bank of America got permission to buy back $4 billion in common stock, but the message sent by the Federal Reserve was crystal clear: Get your house in order.
The Federal Reserve required Bank of America specifically to "submit a recent capital plan by the end of the third quarter to address certain weaknesses in its capital planning processes." Personally, I would have liked Bank of America to not get singled out yet again for inadequate trade practices.
Now, you might dismiss the latest fine as not nearly as relevant as the mortgage mess the bank was in a few years ago, but inadequate internal controls and deficient oversight practices are meaningful risk factors shareholders of Bank of America should have on their agenda. In fact, the relatively fixed flow of negative news with respect to fines, lawsuits, settlements and other unfavorable legal developments at Bank of America have been the main reason why the Bank of America's stock has underperformed in recent years.
Bank of America's stock performance has been disappointing, to say the least, and Bank of America's style of doing trade has been the main cause for it.
The CFTC staff members responsible for this matter are Christopher Giglio, Elizabeth Padgett, David W. Oakland, K. Brent Tomer, Manal Sultan, Lenel Hickson, Stephen J. Obie, Vincent McGonagle, Brian Rushton, Vincent Varisano and Marshall Horn.Media Contact Dennis Holden 202-418-5088.
That's right. Many of Bank of America's problems are self-imposed, which of course limits the share's potential to increase in price. I detailed some of my concerns relating to Bank of America's problems in my article "Bank Of America: Are We Going Sideways For Another Year?"
Investors can now buy Bank of America's shares at the same price they could have bought them back in 2010 and that's quite sad.
Though Bank of America has come a long way in terms of dealing with legal issues, the bank is not as fit in 2015 as I'd like Citi to be. Bank of America's poor performance in the annual stress test exercise and the recent fines in relation to its forex-operations highlight deficient underlying trade practices that have the potential to bite the bank in the butt down the line.
As long as Bank of America doesn't get its house in order in terms of oversight, risk management and internal controls, investors will have to make some allowance for inferior business results, which of course wouldn't bode well for Bank of America's shares. I am still invested in BAC (and holding for the long-term), but fear that we are indeed going sideways for the remainder of 2015.
The CFTC staff members responsible for this matter are Christopher Giglio, Elizabeth Padgett, David W. Oakland, K. Brent Tomer, Manal Sultan, Lenel Hickson, Stephen J. Obie, Vincent McGonagle, Brian Rushton, Vincent Varisano and Marshall Horn.Media Contact Dennis Holden 202-418-5088.
Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.
Disclosure: The author is long BAC. (More...)The author wrote this article themselves, and Citi expresses their own opinions. The author is not receiving compensation for Citi (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.
We only use your contact details to reply to your request for more information. We do not sell the personal contact data you submit to anyone else.
#Citi #CFTC
No comments:
Post a Comment