Today, Bank of America agreed to pay a $33 million fine to settle charges brought by the SEC arising out of Bank of America’s acquisition of Merrill Lynch.
Specifically, the SEC accused Bank of America of misleading of investors about performance bonuses that were to be paid to executives at Merrill Lynch following the acquisition of Merrill. The bank neither admitted nor denied these charges in agreeing to the settlement.
This payment represents the culmination of an investigation by New York State officials and the U.S. Congress. New York State Attorney General Andrew Cuomo began this process after accusing the firm of hiding these performance bonuses. Following a state investigation, officials discovered that Merrill Lynch moved up its date for paying bonuses in an effort to conceal what was happening. Furthermore, Bank of America failed to disclose to its shareholders that $5.8 billion was to be paid in bonuses to Merrill personnel. The bank had previously told shareholders that Merrill Lynch was not going to award end-of-year bonuses. Intentionally misleading investors was the most serious charge against Bank of America and was crucial in determining the severity of the fine.
The SEC settlement does not put an end to Bank of America’s problems with this fiasco. The House Committee on Oversight and Government Reform and Cuomo’s office have both suggested that the investigation into the bank’s acquisition of Merrill may continue. Moreover, Bank of America faces shareholder suits over the handling of the acquisition.