The U.S. Securities and Exchange Commission (SEC) filed suit against Bank of America, charging it made false and misleading statements about bonuses paid at Merrill Lynch. But the agency simultaneously announced a settlement with the bank, with Bank of America paying a $33 million fine.
The SEC accused the bank of misleading stockholders and regulators about $5.8 billion in bonus payments made to Merrill Lynch executives after Bank of America acquired the brokerage firm. The suit charged Bank of America claimed that Merrill had agreed to forego end of the year performance bonuses for Merrill executives before the January 1, 2009 merger between the two companies. The bonuses were, in fact, paid.
"Failing to disclose that a struggling company will pay out billions of dollars in performance bonuses obviously violates that duty and warrants the significant financial penalty imposed by today's settlement," Robert Khuzami, Director of the SEC's division of enforcement, said in a statement.
The Bank of America - Merrill Lynch saga broke in early 2009, just as public outrage was building over bonuses paid to major banks that had taken billions in taxpayer dollars. The Merrill Lynch bonuses first came to light in an investigation by New York Attorney General Andrew Cuomo, who made it clear today that his investigation isn't over.
"We are pleased to see that the SEC has taken action with respect to the Bank of America-Merrill Lynch bonus matter, which this Office referred to the SEC on April 23, 2009," Cuomo said. "As we outlined in a letter to Congress on February 10, 2009, the timing of the bonuses, as well as the disclosures relating to them, constituted a 'surprising fit of corporate irresponsibility.' While the SEC has settled their action today, we want to be clear that our investigation of these and other matters pursuant to New York's Martin Act will continue."
The settlement with the SEC remains subject to court approval. Bank of America has made no admission of guilt in accepting the settlement.