Bank of America to pay $33m to settle Merrill bonuses case
Bank of America has agreed to pay $33m (£19.5m) for charges of allegedly misleading investors about billions in bonuses it agreed to pay Merrill Lynch executives when it was on the verge of acquiring Merrill for $50bn (£29.6bn) in a 2008 merger. The payment settles a civil suit filed in the Southern District of New York by the Securities and Exchange Commission (SEC). The SEC charged that proxy materials sent to Bank of America shareholders on the proposed acquisition stated that Merrill Lynch had agreed not to pay performance bonuses and other compensation to executives prior to the closing of the merger when, in fact, Bank of America had already contractually authorized Merrill Lynch to pay up to $5.8bn (£3.4bn).
August 04, 2009 at 10:32 AM
2 minute read
Bank of America has agreed to pay $33m (£19.5m) for charges of allegedly misleading investors about billions in bonuses it agreed to pay Merrill Lynch executives when it was on the verge of acquiring Merrill for $50bn (£29.6bn) in a 2008 merger, reports the New York Law Journal.
The payment settles a civil suit filed in the Southern District of New York by the Securities and Exchange Commission (SEC).
The SEC charged that proxy materials sent to Bank of America shareholders on the proposed acquisition stated that Merrill Lynch had agreed not to pay performance bonuses and other compensation to executives prior to the closing of the merger when, in fact, Bank of America had already contractually authorized Merrill Lynch to pay up to $5.8bn (£3.4bn).
In a statement, Robert Khuzami, director of the SEC's division of enforcement, said: "Companies must give shareholders all material information about corporate transactions they are asked to approve. Failing to disclose that a struggling company will pay out billions of dollars of performance bonuses obviously violates that duty and warrants the significant financial penalty imposed by today's settlement."
Bank of America agreed to the settlement without admitting or denying the allegations.
"Bank of America believes that the settlement… represents a constructive conclusion to this issue," company spokesman Scott Silvestri said in a statement.
New York attorney general Andrew Cuomo, who referred the case to the SEC in April, said his investigation is continuing. The SEC said its probe also is ongoing.
Lewis Liman of Cleary Gottlieb Steen & Hamilton represented Bank of America, while David Rosenfeld, associate regional director for the New York regional office, was lead counsel for the SEC.
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