Securities and Exchange Commission v. Bank of America Corporation, Civil Action Nos. 09-6829, 10-0215

Bank Of America Agrees to Pay $150 Million to Settle SEC Charges

The Securities and Exchange Commission today filed a motion seeking court approval of a proposed settlement whereby Bank of America will pay $150 million and strengthen its corporate governance and disclosure practices to settle SEC charges that the company failed to properly disclose employee bonuses and financial losses at Merrill Lynch before shareholders approved the merger of the companies in December 2008.

The SEC previously filed two sets of charges in the U.S. District Court for the Southern District of New York alleging Bank of America failed to disclose material information to shareholders prior to their vote to approve the merger with Merrill Lynch. In the first enforcement action on Aug. 3, 2009, the Commission charged Bank of America with failing to disclose, in proxy materials soliciting shareholder votes for approval of the merger, its prior agreement authorizing Merrill to pay year-end bonuses of up to $5.8 billion to its employees prior to the closing of the merger. In the second enforcement action on Jan. 12, 2010, the Commission charged Bank of America with failing to disclose the extraordinary losses that Merrill sustained in October and November 2008.

Under the terms of the proposed settlement, which are subject to approval by the Honorable Jed S. Rakoff, the $150 million penalty will be distributed to Bank of America shareholders harmed by the Bank’s alleged disclosure violations. The Commission will propose a distribution plan at a later date.

The proposed settlement requires Bank of America to implement and maintain seven remedial undertakings for a period of three years:

  • Retain an independent auditor to perform an audit of the Bank’s internal disclosure controls, similar to an audit of financial reporting controls currently required by the federal securities law
  • Have its Chief Executive and Chief Financial Officers certify that they have reviewed all annual and merger proxy statements.
  • Retain disclosure counsel who will report to, and advise, the Board’s Audit Committee on the Bank’s disclosures, including current and periodic filings and proxy statements.
  • Adopt a “super-independence” standard for all members of the Board’s Compensation Committee that prohibits them from accepting other compensation from the Bank.
  • Maintain a consultant to the Compensation Committee that would also meet super-independence criteria.
  • Provide shareholders with an annual non-binding “say on pay” with respect to executive compensation.
  • Implement and maintain incentive compensation principles and procedures and prominently publish them on Bank of America’s Web site.

The proposed settlement includes a Statement of Facts describing the details behind the allegations in the actions based on the discovery record.

The SEC is grateful for the support and cooperation of Attorney General Andrew Cuomo and the Office of the New York State Attorney General. The SEC also thanks Attorney General Roy Cooper, Attorney General of the State of North Carolina, and his staff for their collaboration on the terms of the proposed settlement. The SEC acknowledges the assistance of the U.S. Attorney’s offices for the Southern District of New York and Western District of North Carolina, the Federal Bureau of Investigation, and the Office of The Special Inspector General for the Troubled Asset Relief Program in the investigation leading to the actions.


S.E.C.’s Settlement With Bank of America

One Response to “Securities and Exchange Commission v. Bank of America Corporation, Civil Action Nos. 09-6829, 10-0215”
  1. B. Murphy says:

    The most egregious situation concerning these issues which cannot will not be corrected with this suit alone, is this is but another indication of how corporate America has infiltrated the courts through the political system and collapsed the state courts nationwide. As this matter shows, the Federal courts are still somewhat alive for protections for the masses. Most federal judges have no worry about re-appointment and some try to do the right thing.

    This didn’t just happen overnight, it was started back in the 70’s when corporations recognized and announced for anyone who would listen, that the system could be bought by first injecting money in small amounts and then in larger and larger amounts until the contributors to elections or appointments were only accomplished by the moneyed interests.

    Mortgages and Healthcare are twins. The politicians and judges who are in the tank for banks and insurance companies(at least two judges on the US Supreme Court) now want the congress to allow insurance companies to do business nationwide without state controls and only federal controls. Gee, wasn’t that the same situation that Reagan gave the banks and look what happened there?

    Seems like this mentality works for banks and insurance companies and their hacks only but on everything else “states rights” are more important.

    It will take 50 years for the people to get back control of the government that has done exactly what they have done for the sake of gold.

    We need more law firms willing to take on these banks and these “stocked” government agencies and courts

    The only thing that will stop these crimes is to lock up some of these people.

    When you realize that Bernie Madoff is only in prison because he didn’t have the right connections and took down insiders, it gives you time for thought.

    If anyone can tell me the difference between Madoff and wall street, I am willing to listen intently.

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