Bank of America Misled Investors, Says SEC, Pays $33 Million for "False Statements" on Merrill Bonuses
OMG hit the deck! The SEC is actually doing its job!
Will Ken Lewis ever win? We here at Jr Deputy Accountant are inclined to say "no, but damn it's hilarious to watch him try." That is our official comment.
I mean really, how much of a disaster has the Merrill deal been for Bank of America? Could it get any worse?
Bank of America Corp has agreed to pay $33 million to settle charges that it made false and misleading statements to investors about bonuses at Merrill Lynch & Co, the U.S. Securities and Exchange Commission said on Monday.
In a lawsuit in Manhattan federal court, the SEC said Bank of America claimed that Merrill had agreed not to pay year-end performance bonuses or other incentive compensation to Merrill executives before the January 1, 2009, without Bank of America's permission.
But the Bank of America had authorized Merrill to pay discretionary year-end bonuses, according to the SEC. Merrill paid $3.6 billion in bonuses near the end of 2008 despite losing $27.6 billion that year.
A spokesman for the bank was not immediately available to comment.
Reuters on industry reaction:
The following is reaction from industry analysts and investors:
JOHN SCHLOEGEL, VICE PRESIDENT OF INVESTMENT STRATEGIES FOR CAPITAL CITIES ASSET MANAGEMENT IN AUSTIN, TEXAS
"Frankly, a lot of people have been suspecting something likely. (Bank of America and Merrill Lynch) they have been under scrutiny for so long and a lot has been portrayed in the background. Bank of America shares are influenced, but the impact will not be extended to other financials. Also, it won't have an impact on the overall market as financials are still being avoided, and nobody is counting on them to lead us to the fantasy land. The focus is on biotech, technology and material players."
TERRY MORRIS, SENIOR VICE PRESIDENT AND SENIOR EQUITY MANAGER FOR NATIONAL PENN INVESTORS TRUST COMPANY IN READING, PENNSYLVANIA
"The stock initially took a jolt, but the fact that it's bouncing back seems like a sign of how strong the market is. It seems like news like that should rock the stock, but its not. That in itself, from how the market is treating it, indicates that the financials are stronger than we think."
MARSHALL FRONT, CHAIRMAN, FRONT BARNETT ASSOCIATES IN CHICAGO
"It doesn't change the fundamental outlook at all for the bank."
"I think it's another chink in (Lewis') armor."
"This is not something that I would worry about as an investor. Ken Lewis should worry about it, but not an investor."
SCOTT MARCOUILLER, SENIOR EQUITY MARKET STRATEGIST AT WELLS FARGO ADVISORS IN ST. LOUIS
"This is certainly going to ruin (Lewis') day.
"For the market, the immediate reaction was we took a dip lower but we've gained a lot of it back. For the individual stocks, it's going to be more of a wait for the implications. It depends on how far they push it.
"It appears like more lying going on but we'll have to see how it plays out, there's two sides to every story."
JR DEPUTY ACCOUNTANT, SENIOR FEDBASHER AND LOL-BRINGER:
"This is fucking hilarious"