BofA to face SEC trial, exits loss-sharing deal
Bank of America Corp. now faces a trial with the Securities and Exchange Commission over billions in bonuses paid at Merrill Lynch.
By Agencies |
WASHINGTON: Bank of America Corp. now faces a trial with the Securities and Exchange Commission over billions in bonuses paid at Merrill Lynch, after a judge threw out the bank's $33 million settlement and rebuked the agency for not pursuing charges against executives.
The news comes as Bank of America executive Anne Finucane prepares to meet Tuesday with Rep. Edolphus Towns, a New York Democrat, about BofA's takeover of the troubled investment bank. BofA missed a Monday deadline to turn over details of the hastily arranged acquisition to a congressional committee.
The SEC had accused BofA of failing to disclose to shareholders that it had authorized Merrill to pay up to $5.8 billion in bonuses to its employees in 2008 even though the investment bank lost $27.6 billion that year. BofA had agreed to pay $33 million to settle the charges without admitting or denying wrongdoing, saying it didn't violate disclosure rules but wanted to avoid litigation with the SEC at a time of market uncertainty.
But U.S. District Judge Jed Rakoff last week called the proposed settlement a breach of "justice and morality," and ordered a trial. He questioned why individual executives at Bank of America weren't charged, and said the settlement unfairly penalized shareholders.
The news comes as Bank of America executive Anne Finucane prepares to meet Tuesday with Rep. Edolphus Towns, a New York Democrat, about BofA's takeover of the troubled investment bank. BofA missed a Monday deadline to turn over details of the hastily arranged acquisition to a congressional committee.
The SEC had accused BofA of failing to disclose to shareholders that it had authorized Merrill to pay up to $5.8 billion in bonuses to its employees in 2008 even though the investment bank lost $27.6 billion that year. BofA had agreed to pay $33 million to settle the charges without admitting or denying wrongdoing, saying it didn't violate disclosure rules but wanted to avoid litigation with the SEC at a time of market uncertainty.
But U.S. District Judge Jed Rakoff last week called the proposed settlement a breach of "justice and morality," and ordered a trial. He questioned why individual executives at Bank of America weren't charged, and said the settlement unfairly penalized shareholders.
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