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The Securities and Exchange Commission (SEC) charged Bank of America for lying to its investors when seeking their approval to complete its acquisition of Merrill Lynch for $50 billion in 2008.

Documents sent to share holders of Bank of America stated that the executives of Merrill Lynch would not get bonuses they usually receive at the end of the year without the consent of the bank. Regulators contend that the largest bank of the country has “already contractually authorized Merrill to pay up to $5.8 billion in discretionary bonuses to Merrill executives for 2008."

Bank of America came to a settlement without committing itself to either affirming or denying the charges. It paid up a penalty of $33 million. In a statement the bank stated, “This is an important step forward for Bank of America.”

Stephen Lerner, of the union group SEIU, in charge of directing financially overhauling campaign, said, “This is further proof that bank executives will do anything to pay themselves bonuses and stick it to taxpayers, shareholders and workers.” For quite some time the group has been clamouring for the resignation of Kenneth Lewis, the CEO of Bank of America.

The matter of the bonuses of Merrill Lynch first came to notice last January with the dismissal of the CEO John Thain. In February, the attorney general of New York, Andrew Cuomo brought to light, few days before the planned merger was formalized, that despite the stating of a record $15 billion losses, Merrill Lynch gave out in bonuses $3.6 million. It was inclusive of $1 million or may be more paid to each of its 700 employees.

David Rosenfeld, the Associate Director of the New York regional office of SEC said in a statement, “As Merrill was on the brink of bankruptcy … Bank of America agreed to allow Merrill to pay its executives billions of dollars in bonuses. Shareholders were not told about this agreement at the time they voted on the merger.”

Bank of America had then denied any knowledge of the bonuses. The bank said in a statement “John Thain decided to pay year-end incentives in December as opposed to their normal date in January. BofA was informed of his decision.” Lewis claimed to the Congress that he had “no authority” regarding the payouts. Lewis said, “John Thain decided to pay year-end incentives in December as opposed to their normal date in January. BofA was informed of his decision.”

It is but expected that the bonus issue will be raised because of the government providing an additional $20 billion to the bank to enable it to complete the merger. The bank has not as yet paid back $45 billion it has taken from the taxpayer’s kitty.

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