Bank of America says ready to settle on auction rates

By Joseph A. Giannone and Jonathan Stempel

NEW YORK (Reuters) - Bank of America Corp, said it is ready to settle federal and state probes into the marketing of auction-rate securities, joining eight other companies that reached agreements.

The bank said it has been in talks for nearly a month with the U.S. Securities and Exchange Commission and regulators in New York and Massachusetts on a resolution that would provide "liquidity relief" to customers hurt when the $330 billion market seized up in February.

"We are ready and willing to enter into an agreement that follows the same basic terms of previously announced settlements," bank spokeswoman Shirley Norton said in a statement Thursday. "We understood that we had reached such an agreement in principle nearly two weeks ago."

A spokesman for New York Attorney General Andrew Cuomo said on Friday that no deal was set yet. "Our investigation into Bank of America is ongoing," said the spokesman, Alex Detrick.

"We are still seeking answers to certain questions that have arisen as a result of our initial inquiries. Hopefully, a settlement will be in reach once we have obtained all the relevant information."

Cuomo was expected to send subpoenas to several Bank of America officials this week, a person familiar with his investigation said earlier this week.

Massachusetts Secretary of State William Galvin threatened on Wednesday to sue Bank of America, saying his office had been unable to settle with the Charlotte, North Carolina-based bank.

Auction-rate debt has rates that reset in periodic auctions. Regulators say brokerages misled investors into believing the debt was safe and the equivalent of cash.