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BoA is to face court over bonuses for Merrill Lynch
22.09.09
Bank of America is facing court over billions of dollars in bonuses paid at Merrill Lynch which it bought in a hastily arranged deal a year ago at the height of the financial crisis.
The Securities and Exchange Commission said it will “vigorously pursue” its case against Bank of America, opening the possibility that bank executives could also face charges.
The bank said it will “vigorously defend” itself.
The decision to go to trial came after a federal judge last week threw out a $33 million (£20 million) proposed settlement of the case.
District judge Jed Rakoff called the proposed settlement a breach of “justice and morality”.
The SEC has accused Bank of America of failing to disclose to shareholders that it had authorised 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.
Bank of America received $45 billion from the taxpayer-financed $700 billion bailout.
The New York Attorney General's office is also drafting what are likely to be civil fraud charges.
