Bank of America settles with SEC over Merrill bonuses
SEC settles with Bank of America but Cuomo's investigation continues
The SEC alleges Bank of America misled its shareholders over the bonus payments, paid ahead of schedule by Merrill Lynch during the firm's takeover by Bank of America.
The regulator says Bank of America gave its shareholders misleading assurances that it had reached an agreement with Merrill that the investment bank would not pay year-end performance bonuses or other discretionary compensation to its executives before the closing of the merger, without Bank of America's consent.
In reality, the SEC says, Bank of America had already authorised Merrill to pay up to $5.8 billion in discretionary bonuses to Merrill executives for 2008, rendering the disclosures made in Bank of America's proxy statement to investors false and misleading.
"Companies must give shareholders all material information about corporate transactions they are asked to approve," said Robert Khuzami, director of the SEC's enforcement division. "Failing to disclose that a struggling company will pay out billions of dollars in performance bonuses obviously violates that duty and warrants the significant financial penalty imposed by today's settlement."
Despite settling with the SEC, Bank of America still faces an ongoing investigation by New York state attorney-general Andrew Cuomo, who on July 30 released his report on the bonus payments made by banks that have been recipients of the US Treasury's Troubled Assets Relief Program (Tarp).
Cuomo has pledged, in a statement relating to the SEC settlement, to continue investigating the bonus payments of the banks (both Tarp recipients) under the powers of New York's Martin Act, 1921, which grants the attorney-general sweeping powers beyond those of any other state regulator, to combat financial fraud.
"We are pleased to see the SEC has taken action with respect to the Bank of America-Merrill Lynch bonus matter, which this Office referred to the SEC on April 23," said Cuomo. "As we outlined in a letter to Congress on February 10, the timing of the bonuses, as well as the disclosures relating to them, constituted a 'surprising fit of corporate irresponsibility'. While the SEC has settled its action today, we want to be clear that our investigation of these and other matters pursuant to New York's Martin Act will continue."
You can read the SEC's announcement of its Bank of America settlement here, and Cuomo's bonuses report here.
http://www.sec.gov/news/press/2009/2009-177.htm
http://www.oag.state.ny.us/media_center/2009/july/july30a_09.html
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
More on Regulation
FRTB start dates must align globally, says European Commission
Lawmaker could trigger delay to market risk rules in Europe if US implementation drags on
Fed green lights more capital relief trades
Five US banks authorised to issue repeat credit-linked notes backed by financial guarantees
Basel III endgame: why moving fast might prove better for banks
Republicans are pushing for reproposal, but a rapid finalisation may prove less far-reaching
Isda pushes to ‘decouple’ Simm calibration from model changes
Emir 3.0 prompts effort to separate risk-weight revisions from methodology updates
Basel war on window-dressing may smooth liquidity, at a price
Changes to G-Sib charge could curb year-end repo volatility, but also cut balance sheet capacity
One year on, regulators still want a cure for bank runs
Broad support for higher outflow assumptions on uninsured deposits, but that won’t save insolvent banks
Watchlist and adverse media monitoring solutions 2024: market update and vendor landscape
This Chartis report updates Watchlist monitoring solutions 2022 and focuses on solutions for sanctions (name and transaction) screening and monitoring adverse media and its related elements
Basel Committee reviewing design of liquidity ratios
Focus on LCR and NSFR after Silicon Valley Bank and Credit Suisse, but assumptions may not change
Most read
- Breaking out of the cells: banks’ long goodbye to spreadsheets
- Too soon to say good riddance to banks’ public enemy number one
- Industry calls for major rethink of Basel III rules