SEC to file more charges against BofA
By Marcy Gordon |
January 13, 2010, Wednesday
|
Print Edition
Print Edition
UNITED States regulators have expanded their charges against Bank of America Corp over billions in bonuses paid at Merrill Lynch, accusing the bank of failing to disclose mounting losses at Merrill before a shareholder vote approving the combination of the two firms.
The Securities and Exchange Commission announced on Monday it had asked a federal judge in Manhattan to allow it to file the new civil charges against the biggest US bank. But the SEC also said it wouldn't charge any BofA individual executives, directors or attorneys because they are not alleged to have "deliberately concealed" information from the bank's outside attorneys or otherwise acted with intent to mislead.
BofA said it was glad the regulators had found no basis to charge any individuals or to assert a charge of fraud against the bank.
However, it added, "Despite this vindication, we believe the new claims the SEC seeks to bring are without merit and we will oppose this motion."
The SEC and BofA are scheduled to go to trial on March 1. The SEC previously accused the bank of failing to disclose the bonus payments after it acquired the brokerage firm a year ago.
Last September, the judge threw out a proposed US$33 million settlement of those charges and ordered a trial. He rebuked the SEC for not pursuing charges against individual BofA executives - a course the SEC said on Monday it wouldn't pursue.
US District Judge Jed Rakoff also called the proposed settlement a breach of "justice and morality," and said it unfairly penalized Bank of America shareholders.
Rakoff ruled at a hearing on Monday the SEC must file a new, separate lawsuit with the new charges concerning disclosure of the Merrill losses, rather than adding them to its suit over the bonuses.
The SEC said it would charge Bank of America with failing to disclose "extraordinary financial losses" at Merrill in the two months preceding the shareholders' vote on December 5, 2008, approving the takeover.
The Securities and Exchange Commission announced on Monday it had asked a federal judge in Manhattan to allow it to file the new civil charges against the biggest US bank. But the SEC also said it wouldn't charge any BofA individual executives, directors or attorneys because they are not alleged to have "deliberately concealed" information from the bank's outside attorneys or otherwise acted with intent to mislead.
BofA said it was glad the regulators had found no basis to charge any individuals or to assert a charge of fraud against the bank.
However, it added, "Despite this vindication, we believe the new claims the SEC seeks to bring are without merit and we will oppose this motion."
The SEC and BofA are scheduled to go to trial on March 1. The SEC previously accused the bank of failing to disclose the bonus payments after it acquired the brokerage firm a year ago.
Last September, the judge threw out a proposed US$33 million settlement of those charges and ordered a trial. He rebuked the SEC for not pursuing charges against individual BofA executives - a course the SEC said on Monday it wouldn't pursue.
US District Judge Jed Rakoff also called the proposed settlement a breach of "justice and morality," and said it unfairly penalized Bank of America shareholders.
Rakoff ruled at a hearing on Monday the SEC must file a new, separate lawsuit with the new charges concerning disclosure of the Merrill losses, rather than adding them to its suit over the bonuses.
The SEC said it would charge Bank of America with failing to disclose "extraordinary financial losses" at Merrill in the two months preceding the shareholders' vote on December 5, 2008, approving the takeover.
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