BoA mis-states derivatives positions by $345 million
Bank of America has contravened Financial Accounting Standards Board (FASB) rules regarding its treatment of derivatives instruments and will recalculate all of its financial statements since 2002.
Bank of America could now face legal action or a fine from the Securities and Exchange Commission (SEC), the US financial regulator. But the bank is warning that uncertainties in the FASB 133 rules, which were introduced back in 1999, could cause further problems. It said 40 companies this year have been forced to restate their financial reports following rule clarifications, but the SEC declined to comment on the figure.
“This is not an isolated incident,” a spokesman for the bank told RiskNews. “There was general consensus out there that there was difficulty in understanding the rules,” he added. However, dealers such as Bank of America regularly provide guidance on rules regarding derivatives hedging rules to their own clients.
“The interpretations of how to apply [FAS 133] continue to evolve,” said Alvaro de Molina, the bank’s chief financial officer. “In light of recent interpretations, we reviewed our accounting treatment of certain hedge transactions and determined a restatement would assure that our financial statements adhere to the most recent guidance for accounting treatment of hedge transactions under [FAS 133].”
The SEC would not rule in or out any possible action against Bank of America.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@risk.net
More on Regulation
CFTC aims to settle ‘hundreds’ of enforcement cases within 30 days
Remediation initiative accompanies new effort to slash penalties for technical violations
Gilt repo clearing mandate on Bank of England’s radar
Sources say regulator mulling benefits of US-inspired regime, but is non-committal
Delving into the European Commission’s proposed overhaul of FRTB
Raft of potential changes would benefit both IMA and SA banks – but only temporarily
Why the survival of internal models is vital for financial stability
Risk quants say stampede to standardised approaches heightens herding and systemic risks
Crypto custody a bit(coin) closer after US accounting U-turn
Federal banking supervisors expected to eventually relax regimes for safeguarding digital assets
Japan’s regulator stands firm behind Basel as peers buckle
Japanese banks fear being at a disadvantage to rivals as Basel III implementation falters
EU racing to comply with active account rules
Industry wants simpler route to exemptions ahead of ‘challenging’ deadline for new clearing regime
CFTC acting chair: ‘We don’t need a Dodd-Frank for crypto’
US regulator wants real-time market surveillance; focuses on rise of liquidity risk