The SEC charged Bank of America with lying to investors about the billions of dollars in bonus amounts paid to top Merrill Lynch executives last year, accelerating the payments before announcing a nearly $10 billion loss in the fourth quarter of 2008.
Bank of America bought Merrill Lynch for $29.1 billion dollars last year, under pressure from the U.S. Federal Reserve. In November 2008, it has indicated in its regulatory filing that it would not pay out bonuses without consent.
But the SEC said in a statement that Bank of America has already “authorized Merrill to pay up to $5.8 billion in discretionary bonuses to Merrill executives” for 2008. Merrill Lynch ultimately paid $3.6 billion in bonuses before the deal was closed on Jan. 1.
New York Attorney General Andrew Cuomo and the SEC have been investigating the case for months. Cuomo had subpoenaed the banking giant over the identities of the executives who had been paid the bonuses.
Bank of America, in a released statement, said that it “neither admitted or denied the allegations” and that the settlement allowed it to “focus” on enhancing shareholder value.
Bank of America also announced management changes on Monday. The bank has a new head for its consumer and small business banking division, its Global Corporate and Investment Banking and Global Wealth and Investment Management units.
