The SEC Sues Bank of America Over Merrill Lynch Statements

The Securities and Exchange Commission on Monday sued Bank of America (NYSE: BAC) (full text of SEC complaint) for allegedly making false and misleading claims in connection with its $50 billion acquisition of Merrill Lynch on Jan. 1, according to a Bloomberg report.

Bank of America said in the November 2008 joint proxy statement that Merrill had agreed not to pay bonuses or other incentives to executives before the closing without Bank of America’s consent, according to the complaint filed today in federal court in New York.

Instead, “Bank of America had agreed that Merrill could pay up to $5.8 billion — nearly 12 percent of the total consideration to be exchanged in the merger — in discretionary year-end and other bonuses to Merrill executives for 2008,” the SEC said in the complaint. [Bloomberg]

The SEC said the omission was “materially false and misleading” because of the size of the bonuses. Merrill paid $3.6 billion in bonuses near the end of 2008 despite losing $27.6 billion that year.The regulator, notes Bloomberg, asked the court to restrain BofA from violating securities laws and to force it to pay a money penalty.

Update:

Well, that was quick. Reuters reports that Bank of America has agreed to pay $33 million to settle charges with the Securities and Exchange Commission.

The news isn’t hurting BAC shares which are still trading at $15.36, up $.57, rtq.

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