Bank of America SEC Allegations
Monday, August 3, 2009 19:47In these tough economic times when the banks are borrowing money form the government and going broke left and right, Bank of America paid huge bonuses to Merrill Lynch executives as part of proposed acquisition and Bank of America misled their shareholders about the huge bonuses. The SEC didn’t take kindly the actions of Bank of America and ordered them to pay $33 million dollar penalty for their actions and practices in the Merrill Lynch deal. The SEC alleges Merrill Lynch paid huge bonuses to top executives with Bank of Americas approval as part of the merger negotiations. Bank of America authorized over $5.8 billion in bonuses to Merrill Lynch executives in fact as part of merger deal.
The SEC took issue with the fact that Bank of America failed to disclose the huge bonuses to share holders when presenting the merger with Merrill Lynch. The SEC complaint was filed in New York and said Bank of America did violate its fiduciary responsibilities to their shareholders by not sharing the fact they intended to pay billions to to Merrill Lynch executives as part of merger. John Coffee a Columbia Law Professor stated he was frankly surprised that the SEC didn’t require Bank of America to hire an outside investigator to see who stated incorrectly the details of the Merrill Lynch deal to shareholders. It is not surprising that Bank of America settled with the SEC as a long court case could have been problematic for Ken Lewis the Bank of America Chairman. The SEC charges come after a lot of complaints from lawmakers were made against Federal Reserve Chairman Ben Beranke, Ken Lewis Bank of America Chief Executive, and Henry Paulson former Treasury Secretary over the past few months. The concerns are beings looked at on Capitol Hill by the House Oversight and Government Reform Committee, the issues will be talked about with former SEC Chairman Christopher Cox in fall.
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