Federal district Judge Jed Rakoff rejected a $33 million deal to settle claims that Bank of America misled investors about an agreement to pay Merrill Lynch & Co. executives billions of dollars in bonuses before the bank bought the troubled investment firm. The Securities and Exchange Commission (SEC) had filed a complaint against the bank last month, claiming that Bank of America stated in a November joint proxy statement for the acquisition that Merrill had agreed not to pay year-end performance bonuses or other incentive pay to executives before the closing without Bank of America’s consent. In the complaint, the SEC claims the Bank of America had agreed that Merrill could pay up to $5.8 billion in discretionary year-end and other bonuses to Merrill executives for 2008.
The SEC complaint further states that Merrill Lynch paid $3.6 billion in bonuses to its executives, despite the fact that it lost $27.6 billion in 2008, a record loss for the firm and nearly $20 billion more than the $7.8 billion it had lost in 2007. Bank of America acquired Merrill on Jan. 1 for $33 billion.
Sources: http://www.huffingtonpost.com/2009/09/14/judge-overturns-bank-of-a_n_285947.html
http://www.bloomberg.com/apps/news?pid=20601087&sid=ak_7l7vmBs.g
Tags: Bank of America, Merrill Lynch, SEC, Wall Street
