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CHARLOTTE — Shares of Bank of America shot up Thursday as a new executive at the bank, as well as a prominent hedge-fund manager, decided to place big bets on the company by buying up blocks of shares.
Shares jumped $1.07, or 6.7 percent, to close at $17.
Sallie Krawcheck, the former Citigroup Inc. executive hired last week as part of a management shake up at the Charlotte, N.C.-based bank, bought more than $1 million worth of the bank's shares on Wednesday, according to a filing with the Securities and Exchange Commission on Thursday.
Krawcheck, whose responsibility includes the bank's Merrill Lynch stock brokers, purchased 63,000 shares for $15.97 a piece. Bank of America acquired Merrill Lynch on Jan. 1 of this year.
News of Krawcheck's purchase comes a day after hedge-fund manager John Paulson, who runs Paulson & Co., disclosed in a filing that he spent about $2.67 billion to purchase 168 million shares in Bank of America during the second quarter.
Paulson foresaw the distress in subprime mortgages and reaped billions by betting against the related securities.
The move makes Paulson & Co. the bank's fourth-largest shareholder, according to data from investor Web site LionShares. The bank's top holder is State Street Global Advisors, with about 357.2 million shares. Barclays Global Investors NA and Vanguard Group each own more than 200 million Bank of America shares.
Separately Thursday, details about Bank of America suing Colonial Bancgroup Inc. surfaced.
In a complaint filed with a U.S. federal court in Florida on Wednesday, Bank of America sued troubled Colonial for more than $1 billion in cash and loans, and asked the court to prevent Colonial from selling or otherwise disposing of the assets.
Bank of America has requested a temporary restraining order to prevent Montgomery, Ala.-based Colonial from selling proceeds it received from Freddie Mac in exchange for mortgage and other loans, and which were owned by Ocala Funding LLC, court documents show.
Colonial currently faces a criminal probe by the Justice Department on accounting irregularities at its mortgage lending unit, and the bank has warned it may be put under receivership.
Bank of America, along with Citigroup Inc. and insurance giant American International Group Inc., is among the largest recipients of government aid. It has received $45 billion from the federal government's $700 billion bank rescue program.
