(CHARLOTTE, N.C.) -- An investigation is underway into whether Bank of America Corp. inflated the value of troubled business loans it sold to investors five years ago, according to a report in the Boston Globe.
The report states that Massachusetts securities regulators are looking into whether the company specifically overvalued the loans in order to sell them and clear them off its books. Secretary of State William F. Gavin says he issued subpoenas Friday seeking company records for two sets of loan obligations in question.
According to a report cited by the Globe, investors hired a Virginia consulting firm to assess the value of the loans when they were bought from the bank in 2007. The study, by Securities Litigation and Consulting Group Inc., says the value of the loans declined by as much as $35 million during Bank of America's purchase of the loans in 2006 and the eventual sale a year later.
Bank of America denies the allegations and says it plans to cooperate with the investigation.
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