BofA Pays $33M Fine Over Merrill Bonus Claim
MADELEINE BRAND, host:
Bank of America has agreed to pay a $33 million fine for misleading shareholders about its recent merger with Merrill Lynch. The Securities and Exchange Commission says the company authorized big bonus payments to Merrill executives without telling its investors.
NPR's Jim Zarroli reports.
JIM ZARROLI: Bank of America's merger with the financially-troubled Merrill Lynch has given the company no end of problems. Now the company's had to settle charges from the SEC that it made false and misleading statements to its shareholders about the deal.
The SEC says Bank of America issued a proxy statement last fall. The statement said Merrill had promised not to give bonuses to top executives without Bank of America's approval. In fact, Bank of America had already authorized Merrill to pay more than $5 billion in bonuses, a fact it concealed from investors.
Charles Elson is a professor of corporate governance at the University of Delaware and a Bank of America shareholder.
Professor CHARLES ELSON (Corporate Governance, University of Delaware): Five billion in bonuses out the door is a lot of money, you know, like it or not. And I think from a shareholder's standpoint, the big question is how on earth - this is a stewardship issue - could you pay bonuses when the company almost went bankrupt?
ZARROLI: When the bonuses became public knowledge in January, the controversy was considerable. Dissident shareholders mounted a campaign against Chief Executive Ken Lewis. And though he beat back the challenge, he did lose his position as chairman.
Bank of America issued a statement today saying it believed the settlement represents a constructive conclusion to the issue. But the case hasn't been put to rest. New York Attorney General Andrew Cuomo said today that he continues to investigate the way the bonuses were handed out.
Jim Zarroli, NPR News, New York.