BofA to face debt sales lawsuit

Bank of America

A U.S. appeals court on Monday revived a lawsuit accusing Bank of America of defrauding Tutor Perini by selling the construction company millions of dollars of auction-rate securities it knew were on the brink of collapse.

Reuters reports that the 1st U.S. Circuit Court of Appeals in Boston said a lower court judge erred in dismissing federal and Massachusetts state securities fraud claims against the bank.

Tutor Perini said Bank of America pushed it to buy auction-rate securities in late 2007 and early 2008 despite knowing the market was "one step away from illiquidity."

The $330 billion auction-rate market seized up in February 2008 when dealers stopped supporting it, saddling investors with illiquid debt that had often been marketed as a cash substitute.

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BofA must face fraud lawsuit by Tutor Perini over debt sales

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