Should Bank of America have told its shareholders that, by buying Merrill Lynch, it was bringing aboard a bomb that would blow a huge hole in its hull? Common sense says “yes.” Bank of America says “no.” The SEC is now following Andrew Cuomo’s lead and looking into it:
Sarah O’Connor and Greg Farrell, FT: The Securities and Exchange Commission is reviewing whether Bank of America broke the law by not telling shareholders about Merrill Lynch’s plan to pay out $3.6bn in bonuses before they voted for a government-backed merger of the two banks.
Merrill paid the bonuses in December, days before it was acquired by BofA and a month before bonuses were normally dispensed.
BofA has said it was not required to tell its shareholders about the bonuses.
But Mary Schapiro, chairman of the SEC, wrote in a letter to a Democratic congressman 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.