Bank Of America Trial With SEC Coming

WASHINGTON — Bank of America Corp. now faces a trial with the Securities and Exchange Commission over billions in bonuses paid at Merrill Lynch, after a judge threw out the bank's $33 million settlement and rebuked the agency for not pursuing charges against executives.

The news comes as Bank of America executive Anne Finucane prepares to meet Tuesday with Rep. Edolphus Towns, D-N.Y., about BofA's takeover of the troubled investment bank. BofA missed a Monday deadline to turn over details of the hastily arranged acquisition to a congressional committee.

The SEC had accused BofA of failing to disclose to shareholders that it had authorized Merrill to pay up to $5.8 billion in bonuses to its employees in 2008 even though the investment bank lost $27.6 billion that year. BofA had agreed to pay $33 million to settle the charges without admitting or denying wrongdoing, saying it didn't violate disclosure rules but wanted to avoid litigation with the SEC at a time of market uncertainty.

But U.S. District Judge Jed Rakoff last week called the proposed settlement a breach of "justice and morality," and ordered a trial. He questioned why individual executives at Bank of America weren't charged, and said the settlement unfairly penalized shareholders.

"The SEC gets to claim that it is exposing wrongdoing on the part of the Bank of America in a high-profile merger, the bank's management gets to claim that they have been coerced into an onerous settlement by overzealous regulators. And all this is done at the expense, not only of the shareholders, but also of the truth," Rakoff wrote in his ruling.

Both the SEC and BofA have defended the earlier settlement proposal as appropriate. But after Rakoff's ruling, the agency weighed its options, either to go to trial or attempt to renegotiate the accord with Bank of America.

On Monday, the SEC said it will "vigorously pursue" its case against Bank of America, adding that it could seek to bring additional charges if supported by the record of evidence that develops in the trial – meaning it could charge individual executives.

Bank of America spokesman Scott Silvestri said the bank's position "continues to be that the (disclosure document) met all legal requirements."

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"We intend to vigorously defend ourselves in court," Silvestri said in a statement.

The SEC trial comes as Bank of America faces pressure from other fronts. The New York Attorney General's office is doing its own investigation into the Merrill Lynch deal and has been drafting what are likely to be civil fraud charges against top bank executives in the coming weeks.

Also, the bank missed a noon deadline Monday to provide additional information about the Merrill Lynch deal to a congressional committee.

Rep. Edolphus Towns, D-N.Y. and chairman of House Committee on Oversight and Government Reform, told the bank in a letter Friday that it was hiding behind attorney-client privilege, which Congress can refuse to recognize during its investigations. Silvestri declined to comment on whether or not the bank met the deadline, but said Anne Finucane, a member of Bank of America's executive management team, will meet with Towns Tuesday to discuss the matter.

Separately Monday, Bank of America agreed to pay $425 million to government agencies, including the Treasury Department, to exit an arrangement under which public funds might have been used to shoulder losses on $118 billion worth of risky assets from the Merrill Lynch takeover. The option was never used, but the government has argued that the bank benefited from the promise of protection.

The move is part of a broader effort by the bank to reduce its reliance on various forms of government support. Charlotte, N.C.-based BofA has been one of the largest benefactors of the government's financial rescue program, receiving a total of $45 billion from the taxpayer-financed $700 billion financial bailout program.

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AP Economics Writer Jeannine Aversa in Washington and AP Business Writers Stephen Bernard and Candice Choi in New York contributed to this story.

Comments

[balancedsolution]

All the while BofA was struggling they somehow found ways to renovate banks

redo their color scheme to RED which is the color of ANGER and this would have cost millions!

Such a bunch of dimwits !

IT's a shame the name America is associated with this BAnk.

The Feds might consider telling them to change their name.

[HST]

Why do the people who head the FDIC get to keep their jobs after letting this disaster happen?
Now they're going to fix it? Yeah right.

[NoMoreBailOut]

The fed is playing in re inflating the housing & finance bubble while the public willingly lets it happen (not that we could stop if if we wanted to). We're all too busy getting rich with stocks while the Wall Street crooks resume their treachery knowing they will get bailed out yet again.

good articles 4 slow news day; http://www.iamned.com

The lack of any finance or heath care reform is appalling

[vascopyjama]

This makes me laugh. What are they going to do, fine the bank a few million which the taxpayers will foot the bill anyway. Until the criminals who looted the banks and the treasury go to jail, justice will not be served.

[OneHeart]

The SEC, along with BofA should be on trial as well for they're inability to monitor and regulate. Hearing them at congressional hearings has become a joke for Wall Street and the banking industries.

Don't know how it could be done, but someone should close down or get rid of the employed culprits like Salazar did with the monitoring department in the Dept. of the Interior, the one that lived the life of drugs, sex, and payoffs.

[angryliberaluser]

If no justice is served the American People are going to get more restless, and the next time something happens...­..there could be real UNREST! WE have to hold people accountable for their actions.

hat tip to: http://www.iamned.com !

Ignorance = Negligence­....... They knew what was going on the whole time, all the while padding their pockets. The U.S. crony-Capitalist justice system is a f**king joke. There must be some way we can outsource for justice against these criminals.

[duxguts]

The rich get rich and the poor get poorer, ain't we got fun.

[unsilent majority]

The only reason that the SEC is doing anything is that they were forced to act by a federal judge. These banks are profoundly corrupt. My client, MFI-Miami http://www.mfi-miami.comm), investigates them regularly for mortgage fraud.

Many of these banks, including Bank of America, don't like handing over copies of mortgage loan documents to homeowners who are investigating them for fraud. We even issued a press release on this: http://www.mfi-miami.com/bank-of-america's-treatment-of-the-elderly

[StJames]

Then CEO Ken Lewis was paid over 1000 times what the average teller at BofA earned. Boy was he worth it! NOT

[NWBrunette]

You got money at BoA? Take it out. Now.

[pragmaticdallasite]

It's FDIC insured, relax

[lightningbolt]

I hope the truth comes out in this trial.

[RandVictims]

I have a proposal:

Take away the Police State protection from these banks and their executives. Don't let them continue to exploit the government for protection while acting against U.S. interests at the same time.

Let them have to deal with the American people directly, - no nanny-state to hide behind. Win-win for the "Free Market" crowd AND the Left.

[Telemachus]

Police protection is socialism -- as are the courts, which protect corporate property rights and enforce contracts, and the roads on which BofA moves its armored trucks. Let BofA pick up the tab for all of the public services it depends on, or withhold those services and see how long it lasts.