Bank of America will pay $33 million to settle a federal lawsuit, filed today, which says the bank misled its investors, Reuters reports. During its takeover of Merrill Lynch, the lawsuit charges, Bank of America told investors Merrill wouldn’t pay bonuses without BoA’s permission before the deal closed. But, the Securities and Exchange Commission holds, BofA had “contractually authorized” Merrill to pay $5.8 billion in bonuses, the Wall Street Journal adds.
Companies must tell investors of activities that could affect the market. “Failing to disclose that a struggling company will pay out billions of dollars in performance bonuses obviously violates that duty and warrants the significant financial penalty imposed by today’s settlement,” said an SEC official.