Bank of America announced Monday that it has agreed to pay a $33 million fine to settle charges brought on by the Securities and Exchange Commission. The complaint was in regard to its disclosure of Merrill Lynch bonuses paid to executives when trying to get shareholder approval to purchase the investment bank.
Bank of America reached an agreement back in September to purchase the ailing Wall Street investment bank for $50 billion, which ultimately was given the green light by shareholders on Dec 5.
According to the SEC’s complaint, Bank of America told shareholders that Merrill Lynch would not pay out bonuses for year-end 2008 without Bank of America’s approval. However, Bank of America authorized up to $5.8 billion in bonus money to be paid out by Merrill Lynch, according to the agency.
Bonuses paid by Merrill Lynch work out to about 12 percent of the $50 billion Bank of America paid for the firm. According to the SEC, bonuses were paid on December 31 and the acquisition deal closed on January 1.
Additionally, the SEC claimed a separate agreement between the banks giving authorization to pay out bonuses was not mailed to shareholders.
The fine settled the SEC accusation that Bank of America made “materially false and misleading claims” to shareholders about bonuses. Bank of America agreed to pay the fine without admitting to or denying the accusations in the complaint.
The SEC complaint may be settled, but Bank of America still faces a bevy of shareholder suits accusing the company of not adequately disclosing Merrill Lynch’s deteriorating financial standing when pushing the deal for a vote.
Bank of America ended up requiring $20 billion in government aid to help finance the deal after Merrill Lynch reported record losses in the fourth quarter.
