BofA targeted in class-action lawsuit

A California law firm has filed a class-action lawsuit on behalf of investors who bought auction-rate securities from Bank of America Corp. and its subsidiaries.

The suit, filed by Girard Gibbs in the U.S. District Court for the Northern District of California, contends BofA misled investors about the nature of the securities and their market.

Since February, the auctions that set the rates for most of the securities have failed, resulting in a lack of liquidity.

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The suit was filed against Charlotte-based BofA (NYSE:BAC), Banc of America Investment Services Inc., and Banc of America Securities.

A BofA spokesman was unavailable to comment.

Separately, Wachovia Securities has received subpoenas and inquiries from the Securities and Exchange Commission and state regulators requesting information on auction-rate securities, according to a filing early this month by Wachovia Corp. (NYSE:WB) with the SEC.

Regulators have requested data concerning the underwriting, sale and subsequent auctions of municipal auction-rate securities and auction-rate preferred securities, the filing states.

Charlotte-based Wachovia says it will cooperate fully in the probe.

According to the filing, Wachovia and Wachovia Securities have been named in a civil suit seeking class-action status for customers who bought and continue to hold auction-rate securities based on alleged misrepresentations about their quality, risk and other characteristics.

Wachovia says it intends to vigorously defend itself in the civil case, which was filed in the U.S. District Court for the Southern District of New York.

Wachovia Securities is the trade name for the corporate, investment-banking and capital markets unit of Wachovia.