SEC seeking more charges against Bank of America over Merrill deal
The Securities and Exchange Commission is seeking additional charges against Bank of America over its looking-worse-by-the-moment purchase of brokerage Merrill Lynch early last year.
These additional charges stem from Bank of America's failure to disclose billions of dollars in mounting losses at Merrill before BofA shareholders were asked to vote on the merger.
The SEC sued BofA last year over $3 billion in bonuses paid to Merrill employees. The two sides reached a settlement, but U.S. District Judge Jed Rakoff refused to accept it and set a trial date for that matter.
In a Dec. 31 letter, the SEC asked the judge to piggyback new charges on top of that action.
BofA bought Merrill in a shotgun wedding, with Fed Chairman Ben Bernanke and former Treasury Secretary Hank Paulson holding the 12-gauge, former BofA chief executive Ken Lewis has maintained. As Merrill's losses became more evident in late 2008, as the deal neared consummation, Lewis considered backing out, but said he was pressured by Bernanke and Paulson to keep Merrill, for fear of another economy-killing Lehman-like collapse.
BofA's non-disclosure of the mounting losses at Merrill prior to the shareholder vote on the deal has cast a shadow on the merger. Lewis maintains he followed all SEC rules for disclosure.
In a statement released Monday, BofA said: "We are disappointed that more than two months after the court-imposed deadline to amend its complaint and in the absence of any new information, the SEC now at the 11th hour is nevertheless trying to add new charges. With a trial set to begin in approximately six weeks, this would materially hinder our ability to mount a defense."
You can read the SEC's entire statement by clicking here.
The BofA-Merrill merger is working hard to replace the AOL-Time Warner deal as the worst of the first decade of the 21st century.
-- Frank Ahrens
Follow me on Twitter at @theticker
January 11, 2010; 4:32 PM ET
Categories: Bailout , Fed Reserve , Regulation , The Ticker , Wall Street | Tags: Bank of America, Ben Bernanke, Hank Paulson, Merrill Lynch
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