A New York judge has rejected a $33 million settlement between Bank of America and the Securities and Exchange Commission in regard to improper bonuses paid out by the acquired Merrill Lynch last year, according to Reuters. Merrill Lynch, which was acquired by Bank of America at the beginning of 2009, paid out $3.6 billion in year-end bonuses despite suffering losses of $27.61 billion. These payouts include 696 bonuses of $1 million or more. The rejection of the proposed settlement by Judge Jed Rakoff will likely lead to further examination of the bonuses, and could cast negative light on BofA and its CEO, Ken Lewis. The SEC may want to attempt to prove that BofA and/or Merrill “essentially lied” about the bonuses, said Rakoff. “What the judge is trying to get at is, was there actual fraud here?” said Cornelius Hurley, director of the Morin Center for Banking and Financial Law at Boston University. “The risks are they go back to their corners, and the SEC really does attempt to prove wrongdoing.”
Judge Rejects BofA Bonus Settlement
The rejection of a $33 million settlement with the SEC may force Bank of America into defending itself against fraud accusations.
August 11, 2009