SEC, BankAm seek $33-m settlement over Merrill Lynch bonus issue

Written by Reuters | New York | Updated: Aug 27 2009, 02:48am hrs
Bank of America Corp and the top US securities regulator sought to persuade a judge to approve their $33 million settlement of a civil lawsuit over the lack of disclosure of billions of dollars of bonuses at Merrill Lynch & Co. A settlement would address part of what has become one of the hottest controversies of the global credit crisis.

In a filing on Monday, Bank of America told Judge Jed Rakoff of Manhattan federal court that it did not mislead shareholders about its approval of up to $5.8 billion of bonuses, saying it was widely understood that Merrill would pay out billions.

Meanwhile, the US Securities and Exchange Commission said that the largest US bank was wrong not to tell shareholders about the payouts, but that a settlement strikes a fair balance between deterrence and not punishing shareholders further. Reasonable people can debate whether the penalty should be higher or lower, but it is squarely within an acceptable range, the SEC said. Rakoff rejected the settlement on August 10, demanding many more details about who knew what and when about the bonuses, including the decision not to reveal what would become $3.6 billion of bonus awards. The merger closed on January 1.