Tuesday, September 22, 2009

BANK OF AMERICA FACES BONUS TRAIL !

The US regulator has confirmed it will sue Bank of America over charges that it misled investors about bonuses when it acquired Merrill Lynch.
Bank of America saved Merrill from collapse at the height of the financial crisis, after saying no bonuses would be paid without shareholder approval.
But up to $5.8bn (£3.4bn) in bonuses were later authorised.
Separately, Bank of America announced several new measures to reduce its reliance on US aid.
It will pay $425m to cancel unused federal guarantees against losses at Merrill from government agencies, including the US Treasury.
Bank of America received a total of $45bn from the taxpayer-financed $700bn bail-out programme. The US government has a minority holding in the bank.
But the bank is now seeking to exit the bail-out programme, which puts restrictions on executive pay, dividends and capital spending.

The bonus case concerns whether Bank of America failed to disclose to shareholders that it had authorised Merrill to pay up to $5.8bn in bonuses to its employees in 2008, even though the investment bank lost $27.6bn that year.
The Securities and Exchange Commission (SEC) said it would "vigorously pursue" its case against Bank of America over those bonuses.
Bank of America spokesman Scott Silvestri said: "We intend to vigorously defend ourselves in court."
Bank of America had agreed to pay a $33m fine to settle charges that it misled investors about bonuses when it acquired Merrill Lynch in January. The bank neither admitted nor denied the SEC allegations.
However, a federal judge threw out that settlement last week.
District Judge Jed Rakoff called the proposed settlement a breach of "justice and morality" and ordered a trial.
He rebuked the SEC for not pursuing charges against individual Bank of America executives, which could now happen.
BBC NEWS REPORT.

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