A judge has ordered a hearing Monday on a $33 million proposed settlement between the Securities and Exchange Commission and Bank of America Corp. over executive bonuses.
Bank of America had agreed earlier this week to pay the penalty to settle government charges that it misled investors about Merrill Lynch‘s plans to pay bonuses to its executives.
But the settlement is subject to court approval, and Judge Jed S. Rakoff declined to grant it pending Monday’s hearing.
In a statement, Rakoff said the proposed settlement “would leave uncertain the truth of the very serious allegations made in the complaint.”
In seeking approval to buy Merrill, Bank of America told investors that Merrill would not pay year-end bonuses without Bank of America’s consent. But in its complaint filed with the U.S. District Court for the Southern District of New York, the SEC said Bank of America had already authorized New York-based Merrill to pay up to $5.8 billion in bonuses and didn’t share that information with shareholders.
That meant a statement Bank of America mailed to 283,000 shareholders of both companies about the Merrill deal “materially false and misleading,” the SEC contends.
Bank of America agreed on Monday to settle the charges without admitting or denying the allegations.
Bank of America, along with Citigroup Inc. and insurance giant American International Group Inc., is among the largest recipients of government aid. It has received $45 billion from the federal $700 billion bank rescue program. (AP)
