2009-08-03 19:53:02
$3.6 Billion Dollars in Bonuses Were Paid Out to Merrill Lynch Employees in 2008
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Bank of America agreed to pay a $33 million dollar fine to the SEC earlier today to settle charges that it had misled investors regarding bonus payouts to Merrill Lynch.
If you'll remember, Bank of America bought Merrill Lynch late last year in a hastily arranged deal that was concluded at the height of the economic meltdown.
According to the SEC, Bank of America claimed in a letter to thousands of shareholders that bonuses would not be paid out to Merrill Lynch employees "without its consent".
Well (surprise, surprise), it turns out that Bank of America was promising one thing to its shareholders, and an entirely different thing to Merrill Lynch.
It turns out that Bank of America had in fact authorized Merrill Lynch to pay its employees "up to $5.8 billion dollars in bonuses", despite telling shareholders (who needed to vote to approve the deal) something entirely different.
A total of $3.6 billion dollars in bonuses were paid out to Merrill Lynch employees in 2008, despite the fact that the company ended up losing a whopping $27.6 billion dollars in 2008.
Bank of America mailed out a statement to 283,000 shareholders prior to the vote on the deal, kindly omitting the fact that billions of dollars in year-end bonuses had already been authorized.
BAC shareholders approved the deal on December 5th, and the bonuses were paid out on December 31st. The deal officially closed one day later.
According to the SEC, Bank of America didn't bother to inform its shareholders of the bonus agreement prior to the vote. The SEC contends that Bank of America had an obligation to supply its shareholders with all of the material information pertaining to the transaction prior to the vote.
A spokesman at BAC said that the fine is a "constructive conclusion to this issue".
$33 million dollars? Just the "cost of doing business" in this day and age, I guess.
Lie to your shareholders, pay out a ridiculous amount of bonus money to a company that lost tens of billions of dollars in a single year, and then pay a $33 million dollar fine.
Sounds like a good deal to me.
Source: AP - BofA agrees to $33M SEC fine over Merrill bonuses
Filed under: Stock Market Scandals
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