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California To Get $9.7 Million From Bank Of America In ARS Case

DOW JONES NEWSWIRES

California will get $9.7 million as part of Bank of America Corp.'s (BAC) agreement last fall to pay $50 million in penalties as part of a multi-state probe of the auction-rate-securities market.

The disclosure of California's portion, made Monday, comes as the company has previously agreed to repurchase billion of dollars in ARS, the market for which seized up in February 2008 as auctions began failing amid a dearth of investors.

Bank of America neither admitted or denied the order's findings and conclusions in which the $9.7 million in penalties was contained.

Auction-rate securities are debt instruments whose interest rates are meant to be reset periodically at daily, weekly or monthly auctions. But as the auctions began failing 16 months ago, interest rates rose while investors were locked into long-term investments that had been promoted as safe and liquid.

California's Department of Corporations, in saying its deal will aid the return of more than $3 billion to investors in the state, noted Bank of American made repurchase offers to all individual, small-business and charitable institutional investors from California.

For other institutional investors, the company has to use their "best efforts" to work with ARS issuers, state and federal regulators and other parties to attempt to provide liquidity solutions by year's end. Futher action could be called if no solution results, the agency added.

London Stock Exchange

LONDON—The London Stock Exchange on Wednesday reported a full-year loss of 338 million pounds ($553 million) as it absorbed a heavy charge and one-off losses related to its takeover of Borsa Italiana.

The loss for the year ending March 31 contrasted with a profit of 168.3 million pounds in the previous year. Revenue rose 23 percent to 671.4 million pounds.

LSE shares were down 0.4 percent at 697.5 pence at midday.

The company raised its full-year dividend by 2 percent to 24.4 pence per share.

Chris Gibson-Smith, the chairman, said a 484 million pounds goodwill write-off was "a technical accounting adjustment reflecting the major deterioration in current economic conditions."

"It belies the high quality of, and potential arising from the combination," Gibson-Smith said.

"Indeed, the assessed value of Borsa Italiana remains comfortably above the 1.3 billion pounds value at the time of completion of the merger given the strengthening of the euro."

Operating profit before the big impairment charge was up 3 percent to 274 million pounds. Operating profit was dented by exceptional costs of 15.2 million pounds relating to integrating the two exchanges and amortization related to the Italian business of 49.4 million pounds.

"We have performed well, with revenue up 23 percent, reflecting the overall resilience and diversification of our business, and full year effect of our merger with Borsa Italiana," said Clara Furse, who was retiring on Wednesday after eight years as chief executive.

"We have also made very good progress in achieving synergies from the merger and will now deliver a further increase in cost synergies to 32 million pounds, up by 60 percent from the original plan," she added.

Xavier Rolet, who formerly headed Lehman Brothers' operations in France, succeeds her as chief executive.