The Bank of America agreed to pay US regulators a $33-million fine for misleading its investors about billions of dollars in bonuses paid to Merrill Lynch executives when it acquired the investment bank.
While seeking stockholder approval of the deal to acquire Merrill Lynch, the Bank of America said that Merrill would not pay year-end bonuses to its executives, the Securities and Exchange Commission said. But the bank had actually already reached a deal with Merrill Lynch that allowed it to pay $5.8 billion in bonuses.
The SEC alleges that stockholders were misled when they were told no bonuses would be paid, while the companies had actually already agreed on a payment plan. This information must be disclosed under financial regulations.
"As Merrill was on the brink of bankruptcy and posting record losses, Bank of America agreed to allow Merrill to pay its executives billions of dollars in bonuses. Shareholders were not told about this agreement at the time they voted on the merger," David Rosenfeld, associate director of the SEC in New York said in a statement.