The SEC fined Bank of America $33 million today for lying to shareholders about bonuses paid to Merrill Lynch employees during B of A’s takeover of Merrill. Make that a $33 million fine for handing out bonuses of $5.8 billion to employees of a company that almost went out of business last year.
The SEC alleges that Bank of America told investors in proxy documents on the Merrill acquisition that Merrill agreed it would not pay bonuses or other compensation to executives before the takeover deal was closed without Bank of America’s consent.
In truth, according to the SEC, Bank of America had already “contractually authorized” Merrill to pay $5.8 billion in bonuses.
But the SEC’s director of enforcement had the gall to say $33 million was a “significant financial penalty.” Not only is it a tiny fraction of the bonus amount, but B of A doesn’t even have to admit it did anything wrong. From the New York Times:
Bank of America said in a statement that “the settlement, which it entered into without admitting or denying the S.E.C’s allegations, represents a constructive conclusion to this issue. This is an important step forward for Bank of America and allows us to focus our energies on enhancing stockholder value by continuing to execute our strategies for the long-term success of our business.”
So, let me get this straight. Now, B of A will focus on enhancing shareholder value after drowning it by paying out $5.8 billion worth of bonuses to people who drove their company into the ground. And, as a taxpayer, why do I get the sinking feeling that I’m chipping in to pay this measly fine?
But perhaps, it’s not over quite yet. New York Attorney General Andrew Cuomo is still looking into the matter:
“We are pleased to see that the S.E.C. has taken action with respect to the Bank of America-Merrill Lynch bonus matter, which this office referred to the S.E.C. on April 23, 2009,” Mr. Cuomo said in a statement.
“As we outlined in a letter to Congress on February 10, 2009, the timing of the bonuses, as well as the disclosures relating to them, constituted a ‘surprising fit of corporate irresponsibility.’ While the SEC has settled their action today, we want to be clear that our investigation of these and other matters pursuant to New York’s Martin Act will continue.”
But so far, there’s just no way to see this as anything other than another wimpy effort by the SEC and another bank getting away with the jar and the cookies.
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