BofA Settles $33 Million SEC Fraud Action for Misleading Shareholders
August 4, 2009 by Desiree Washington
Filed under Business, News
Bank of America (BOA) agreed Monday to pay $33 million to settle SEC allegations that it failed to disclose the $5.8 billion it had agreed to pay to Merrill Lynch & Co. executives before it bought Merrill in September 2008. The settlement came within moments of the SEC’s filing of its complaint against BOA in Manhattan federal district court. 
According to the SEC complaint, BOA had already authorized Merrill Lynch to pay up to $5.8 billion in discretionary bonuses for 2008 when it announced its acquisition of Merrill Lynch in 2008, even though proxy materials soliciting shareholder votes on the merger stated that Merrill Lynch had agreed not to pay year-end bonuses or other discretionary compensation to executives without Bank of America’s consent. The complaint asserted that the proxy statements were materially false and misleading.
Wachtell, Lipton, Rosen & Katz represented Bank of America in preparing the proxy statement.
In a statement announcing the complaint and settlement, the SEC’s Khuzami said, “Failing to disclose that a struggling company will pay out billions of dollars in performance bonuses obviously violates that duty and warrants significant financial penalty.”
The bank released a statement describing the settlement as “an important step forward for Bank of America [that] allows us to focus our energies on enhancing stockholder value.” Additionally, the statement says, “Bank of America believes that the settlement…represents a constructive conclusion of this issue.”
New York Attorney General Andrew Cuomo issued a statement in respose to the settlement, saying he was “pleased” that the SEC had taken action, but warning that “we want to be clear that our investigation…will continue.”
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