Bank of America to buy back auction-rate securities

On Wednesday, Bank of America said it will buy back billions worth of auction-rate securities held by more than 5000 customers nationwide. This would be a part of a settlement agreement with Massachusetts regulators.

The securities involved investors buying and selling instruments. The market for securities collapsed in February.

The Charlotte, a North Carolina-based bank said it continues to cooperate fully with investigations by the Securities and Exchange Commission and the New York Attorney General's Office.

"The SEC Division of Enforcement expects to soon announce the terms of a preliminary settlement with Bank of America that results from our ongoing auction-rate securities investigations," Linda Thomsen, director of the SEC's enforcement division, said in a statement.

Nine other big banks including Bank of America have agreed to buy back more than $50billion of securities.

Shares fell 12 cents, or less than 1 percent, to $32.40.

Securities the same value as before

Bank of America will buy back securities at the same value when purchased by customers. It applies to trusts and individual investors as well as businesses with account values up to $10 million and charities with account values up to $25 million.

The repurchase program will begin Oct. 1 and remain open through the end of the year.

"We fully recognize the effect that the unprecedented market conditions have had on our clients, and we appreciate their patience as we worked with the regulators to reach an agreement that would provide liquidity relief to the investors," said Jerry Dubrowski, a spokesman for Bank of America.

Massachusetts Secretary of State William Galvin emphasized the agreement focuses on smaller investors who have been unable to get access to their money for months.

"It gives these people some relief," he said.

Bank of America said it expects to record a pretax charge of about $275 million in connection with the buy-back program.