[JURIST] A federal judge on Wednesday refused to accept [order, PDF] a $33 million settlement agreement [press release] reached this week between the Securities and Exchange Commission (SEC) [official website] and Bank of America [corporate website]. The SEC charged BOA on Monday with misleading investors [complaint, PDF; JURIST report] regarding billions of dollars paid to Merrill Lynch [corporate website] executives during the acquisition of the firm. The complaint alleged that, during the merger of the companies, the agreement for BOA to allow Merrill Lynch to pay discretionary bonuses was located in a separate document that was not disclosed prior to the shareholders' vote on the merger. The agreement allowed Merrill Lynch to pay up to $5.8 billion of the $50 billion merger consideration as executive bonuses. Ultimately, $3.6 billion in bonuses were paid to Merrill Lynch executives despite record losses in 2008. BOA agreed to settle with the SEC and pay a $33 million penalty but did not admit or deny the allegations. Judge Jed Rakoff of the US District Court for the Southern District of New York [official website] rejected that settlement, ruling that it could be unfair to the public, noting that the basis of the $33 million figure is unspecified. Rakoff set a hearing for Monday.
The recent economic downturn has led to numerous SEC financial fraud suits. On Thursday, former American International Group (AIG) [corporate website] executives agreed to settle [press release; JURIST report] a suit [complaint, PDF] brought by the SEC alleging their involvement in inflating the company's reported financial records. On Tuesday, General Electric Co. (GE) agreed to settle [JURIST report] for $50 million an SEC suit which alleged that the company misled investors in regards to its financial statements.