Page 189 - Bank Case Studies

However, weeks before the

deal went through, Merrill

had given out $3.6 billion in

bonuses ahead of schedule

with four top executives

alone receiving $121

million dollars. According

to New York Attorney General Andrew Cuomo:

“One disturbing question that must be answered is
whether Merrill Lynch and Bank of America timed

the bonuses in such a way as to force taxpayers to

pay for them through the deal funding.” (10)

It emerged that as Merrill was posting its losses BofA was

pressured by Federal Reserve chairman and Treasury

Secretary to conceal the financial predicament of Merrill

until after its shareholders had approved the acquisition. A

swath of civil law fraud suits followed resulting in numerous

fines.

Meanwhile, in August, 2009, Bank of America agreed to pay

a $33 million fine, without admission or denial of charges, to

the SEC over the non-disclosure of an agreement to pay up

to $5.8 billion of bonuses at Merrill. The court rejected the

settlement but judge Jed S. Rakoff, agreed an increased fine

of $150 million. He wrote,