Bank of America to face SEC charges
SEC planning charges against Bank of America over claims stemming from Merrill Lynch acquisition. The agency had originally sought a settlement.
By Lauren Tara LaCapra, TheStreet
A Securities and Exchange Commission official says the agency plans to pursue charges against Bank of America (BAC), and possibly some of its executives, over its handling of the Merrill Lynch acquisition.
Enforcement Director Robert Khuzami told the House Committee on Oversight and Government Reform on Friday that the SEC will "vigorously pursue our charges against Bank of America and take all necessary steps in an effort to prove our case in court."
The agency had initially sought a $33 million settlement with Bank of America, in which the bank admitted no wrongdoing. In an unusual move, a New York judge questioned the fairness of that punishment vs. the alleged misconduct, and prevented the settlement from going through.
Khuzami said the SEC had done what it could, based on the facts of the case and earlier precedent. It now plans to investigate the matter further and rely on new information to bring charges against Bank of America, and possibly some top executives.
Federal Deposit Insurance Corp. Chairwoman Sheila Bair also testified before the committee in its fifth and last hearing about the Bank of America-Merrill Lynch deal.
Bank of America has been locked in a battle with regulators and lawmakers over Merrill's 2008 bonus payments amid escalating losses. The bank did not disclose the information as soon as it was known. It also didn’t tell investors that then-Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke had pressured Bank of America CEO Ken Lewis to close the deal, despite his doubts.
Bank of America ended up accepting an additional $20 billion to cover Merrill's losses, a move that angered some investors and taxpayers. The bank repaid its entire $45 billion in bailout funds this week. Lewis is scheduled to resign at year-end, though a successor has not yet been named.
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The solid report comes a month after the retailer closed all of its Canadian operations.
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