Administration February 5, 2006

BofA Shareholders Turn Down Regulatory Study Committee Formation

May 26, 2004 (PLANSPONSOR.com) - Bank of America Corp. (BofA) shareholders turned aside a proposal to appoint independent directors to a special study committee to review the bank's mutual fund trading policies.
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BofA said that about 8.32% of the votes cast favored the proposal made by the AFL-CIO Reserve Fund, which owns 1,000 Bank of America shares, according to a Reuters story. The initiative also called for the committee to report to shareholders on how well the bank complies with securities laws.

The fund made the proposal after the bank and FleetBoston Financial Corp. agreed in March to pay $515 million and give up $160 million of fees to settle charges that it helped favored clients trade mutual funds improperly at the expense of ordinary shareholders (See  BofA, Fleet Come to Terms with Spitzer, SEC in Fund Probe ). The settlement involved no admission or denial of wrongdoing.

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The Charlotte, North Carolina-based BofA, which bought Fleet on April 1, said it is taking several actions that comprise what Chief Executive Kenneth Lewis has called a “comprehensive road map” to improve fund policies. “The board’s opinion (is) that the company has gone well beyond” the AFL-CIO proposal, said Charles Gifford, BofA chairman, at the bank’s annual meeting in Charlotte. “It is absolutely our expectation that this comprehensive road map that Ken talks about will take place,” he said.

As part of the settlement, Bank of America committed to ensure “best-in-class” governance policies for the board of trustees of its Nations Funds. Eight fund directors are to depart within one year for their role in letting the Canary Capital Partners LLC hedge fund market time the funds.

National and state regulators have been pursuing a wide-ranging mutual fund investigation focusing on late trading, market timing, and certain fund sales practices.

Administration February 4, 2006

PCAOB To Issue Auditor Guidance for Sarbanes-Oxley

April 14, 2005 (PLANSPONSOR.com) - Public Company Accounting Oversight Board (PCAOB) Chairman William McDonough has announced that the group will issue guidance in mid-May to help auditors find more balance with internal-control reviews related to Sarbanes-Oxley.
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The PCAOB staff will release the guidance May 16, according to Dow Jones. The group is also considering changes to its rule on internal control reviews; however, McDonough acknowledged that this change could take six months and would be too late to be of much help this year.

Many executives have complained that the rule has made it so attention is diverted from business and merger activity towards internal controls, according to Dow Jones. At a meeting with the Securities and Exchange Commission (SEC) on the internal-control measures, many auditors said that they are worried about being second-guessed by regulators, which has led to the PCAOB planning to release further guidance to auditors. The guidance will focus on reducing “give-and-take” between companies and their independent auditors, according to PCAOB board members.

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Sarbanes-Oxley requires US public companies to make annual assessments of their internal controls over financial reporting, subject to further review by an independent auditor. Larger problems must be reported to shareholders. Large firms have already had to comply with the law, and have reported numerous problems – the largest being cost – with the rule (See Survey: Average SOX Compliance Bill is $16M ). Small companies were granted a one-year extension to comply with the rule (See SEC Delays Certain SOX Compliance Deadlines 12 Months ).

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