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Bank of America helped clients avoid taxes, a report says

February 11, 2015, 5:15 PM UTC
Bank Of America Cancels Plan To Charge Five Dollar Fee For Debit Card Use
CHICAGO, IL - NOVEMBER 01: A sign hangs above a Bank of America branch in the Financial District on November 1, 2011 in Chicago, Illinois. Bank of America Corp. has reportedly announced they will drop its plan to charge customers a $5-per-month fee for making purchases with their debit cards. (Photo by Scott Olson/Getty Images)
Photograph by Scott Olson—Getty Images

Bank of America (BAC) used its government-backed U.S. banking unit for years to finance controversial trades that helped clients avoid taxes, the Wall Street Journal reported, citing internal documents and people familiar with the matter.

The bank last year started phasing out the practice of using funds from the U.S. unit to finance transactions by its European investment-banking arm that, among other things, helped hedge funds avoid taxes on stock dividends, the Journal said on Wednesday.

“BANA (Bank of America National Association) no longer finances dividend arbitrage activity,” Bank of America said in a statement to Reuters.

The practice dates back to at least 2011 when senior Bank of America investment-bank officials in London started pushing subordinates to adopt the policy to take advantage of the lower funding costs enjoyed by the unit, the Journal said.