March 31, 2014 / 11:29 PM / 5 years ago

U.S. judge says SEC lawsuit against Bank of America should proceed

A security guard patrols outside a Bank of America office in Burbank, California August 19, 2011. REUTERS/Fred Prouser

(Reuters) - A federal judge on Monday recommended rejecting Bank of America Corp’s bid to dismiss a U.S. Securities and Exchange Commission lawsuit over $855 million of mortgage securities that soured during the global financial crisis.

U.S. Magistrate Judge David Cayer in Charlotte, North Carolina, made the recommendation four days after urging the dismissal of a separate, related U.S. Department of Justice lawsuit that alleged violations of a different law.

That ruling had been seen as a possible setback for government efforts to fight fraud in the sale of mortgage securities.

“We are reviewing the magistrate judge’s recommendation carefully,” bank spokesman Lawrence Grayson said on Monday, with regard to the SEC case.

Both recommendations are subject to review by U.S. District Judge Max Cogburn in Charlotte. District judges are not bound by magistrate judges’ recommendations but often follow them.

Reporting by Jonathan Stempel in New York; Editing by Lisa Shumaker

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