Posted on Mon, Aug. 03, 2009
last updated: March 15, 2013 11:58:16 AM
The Securities and Exchange Commission today said Bank of America Corp. has agreed to pay $33 million to settle charges the Charlotte bank misled investors about bonuses paid to Merrill Lynch & Co. executives.
The SEC alleged that in proxy materials sent to shareholders about the proposed Merrill acquisition Bank of America said the New York investment bank had agreed to not pay year-end bonuses without Bank of America's consent. The bank, however, had already authorized Merrill to pay up to $5.8 billion in bonuses for 2008 under the merger agreement.
Companies must give shareholders all material information about corporate transactions they are asked to approve, said Robert Khuzami, director of the SEC's Division of Enforcement, said in a statement. 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.
Shareholders approved the $50 billion deal on Dec. 5. Soon after the merger closed on Jan. 1, New York Attorney General Andrew Cuomo began raising questions about bonuses paid to Merrill executives before the deal closed.
The SEC filed its complaint in U.S. District Court for the Southern District of New York. The settlement requires court approval.
Bank of America believes that the settlement, which it entered into without admitting or denying the SEC's allegations, represents a constructive conclusion to this issue, Bank of America spokesman Scott Silvestri said. This is an important step forward for Bank of America and allows us to focus our energies on enhancing stockholder value by continuing to execute our strategies for the long-term success of our business.