Bank of America sued, settles with SEC over Merrill pay
Bank of America (BAC), one of the largest recipients of Treasury Department's bailout funds, disclosed today that it settled a lawsuit regarding its Merrill Lynch acquisition filed by the Securities and Exchange Commission for $33 million.
The SEC alleged that the companies made "materially false and misleading statements" about compensation agreements regarding Merrill employees, saying that the merger documents presented to shareholders stated no end-of-year bonuses would be paid out -- when in reality, $5.8 billion was slated to be distributed to executives. Merrill eventually paid out $3.6 billion in bonuses, despite losing $27.6 billion on the year.
The SEC settlement adds to the heat that Bank of America CEO Ken Lewis will take over the purchase of Merrill Lynch, following Congressional testimony that suggested Federal Reserve Chairman Ben Bernanke and then-Treasury Secretary Hank Paulson pushed him to close the deal even as Merrill's fundamentals deteriorated precipitously toward the end of 2008. Lewis has defended the move, saying Merrill's brokers will be a valuable addition to the company's wealth management efforts.
Separately, it was reported that Bank of America has tapped Sallie Krawcheck to run its Global Wealth and Investment Management unit. Krawcheck previously headed Citigroup's (C) Smith Barney wealth-management division, and also served as Citigroup's chief financial officer. A Bank of America spokesman was not immediately available to comment.
James Cullen also edits and writes at CollegeAnalysts.com. He is the vice president of the Boston College Investment Club, which owns shares of BAC, but he has no personal position in the stocks mentioned above.