U.S. judge says SEC lawsuit against Bank of America should proceed

U.S. Magistrate Judge David Cayer in Charlotte, North Carolina, where the bank is based, made the recommendation four days after urging dismissal of a related Department of Justice civil lawsuit, which alleged violations of a different law. That ruling had been seen as a possible setback for government efforts to fight fraud by Wall Street in the sale of mortgage securities. "We are reviewing the magistrate judge's recommendation carefully," bank spokesman Lawrence Grayson said on Monday, with regard to the SEC civil case. Authorities accused Bank of America of misleading Wachovia Corp, now part of Wells Fargo & Co, and the Federal Home Loan Bank of San Francisco about risks in the $855 million offering, dating from early 2008 and backed by 1,191 "jumbo" adjustable rate mortgages that proved less safe than expected.

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