Tuesday, April 14, 2009

SEC Reviewing Whether Bank of America Broke The Law

. Tuesday, April 14, 2009

By stockOzone team

The U.S. Securities and Exchange Commission is reviewing whether Bank of America Corp (NYSE: BAC) breached federal securities law by failing to disclose to shareholders Merrill Lynch's plan to pay $3.62 billion in bonuses before they voted for the merger of the banks, media reports suggested on Monday.

In a letter to Cleveland Democratic U.S. Rep. Dennis Kucinich, Mary Schapiro, chairman of the SEC, wrote that the regulator was "carefully reviewing the Bank of America disclosure" and had not yet expressed a view on whether the bonus plan should have been revealed.

"Where the SEC believes that there has been an omission of material facts necessary in order to make the statements not misleading, we will carry out our enforcement responsibilities with vigour and vigilance," Schapiro wrote further.

Kucinich, who chairs a congressional committee probing the bonuses, last week said in a letter to the SEC that there were "significant questions" surrounding Bank of America's failure to disclose bonus details before shareholders voted on the bank's acquisition of Merrill.

"There is no question that any reasonable BOA shareholder would have considered the Merrill bonuses to be material to their decision on whether to approve the merger," Kucinich's letter said. "The federal securities laws were designed to protect shareholders against precisely such omissions of material information."

Meanwhile, in a statement last week, Bank of America had said "we believe we made the appropriate and legal disclosures in the materials available to shareholders" before the meeting.

Both SEC and Bank of America refused to comment on the story.

Angry shareholders like Jerry Finger and two California pension funds have already filed lawsuits against BofA, alleging that the firm "misstated or omitted" crucial information about Merrill Lynch when informing shareholders about the Merill deal.

Disclosure: Author does not own any of the stocks discussed here.

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