Bank of America's $33 Million Fine Won't Be Its Last

More

Bank of America has agreed to pay $33 million after the Securities and Exchange Commission accused the nation's leading lender of making false statements to investors about Merrill Lynch bonuses. My hunch is that this won't be the last penny that BofA pays out for concealing information about the Merrill Merger.


DealBook reports on the SEC accusation:

The lawsuit involves statements Bank of America made in its proxy statement about the Merrill deal, which was announced on Sept. 15. The bank told its investors in the proxy, filed on Nov. 3, that Merrill had agreed not to pay year-end performance bonuses or other incentive pay before closing the deal without Bank of America's consent.

But, unknown to investors, Bank of America had already agreed that Merrill could pay up to $5.8 billion in year-end compensation to employees, the S.E.C. said in its complaint, which was filed in New York federal court. That agreement was memorialized in a separate bonus schedule that was omitted from the proxy statement, the S.E.C. said.

Another pending lawsuit, by BofA pension funds, holds that CEO Ken Lewis withheld material information about Merrill's losses from shareholders before and after they voted to approve of the merger on December 5, 2008. Shortly after that vote, Lewis infamously approached former Treasury Sec. Hank Paulson and Fed Chair Ben Bernanke about backing out of the deal. Lewis testified that he felt forced to eat Merrill's crap sandwich of assets after Pauslon threatened to replace him and members of the board. Of course this raises a crucial question of fiduciary responsibility: If Lewis went forward with the merger thinking that it was bad for his shareholders, his actions might be illegal under securities laws. In other news that might or might not be 100 percent related, Bank of America appears to be shuffling management to prepare for a successor at CEO.
Jump to comments
Presented by

Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

Get Today's Top Stories in Your Inbox (preview)

This Short Film Skewers Hollywood, Probably Predicts Disney's Next Hit

A studio executive concocts an animated blockbuster. Who cares about the story?


Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register. blog comments powered by Disqus

Video

In Online Dating, Everyone's a Little Bit Racist

The co-founder of OKCupid shares findings from his analysis of millions of users' data.

Video

What Is a Sandwich?

We're overthinking sandwiches, so you don't have to.

Video

How Will Climate Change Affect Cities?

Urban planners and environmentalists predict the future of city life.

Video

The Inner Life of a Drag Queen

A short documentary about cross-dressing, masculinity, identity, and performance

Video

Let's Talk About Not Smoking

Why does smoking maintain its allure? James Hamblin seeks the wisdom of a cool person.

Writers

Up
Down

More in Business

Just In