RALEIGH, N.C. (Legal Newsline) - Bank of America has reached a settlement with North Carolina Attorney General Roy Cooper and the federal Securities and Exchange Commission over its 2009 merger with Merrill Lynch.
Bank of America faced multiple lawsuits that alleged it did not warn shareholders of Merrill Lynch's shaky financial state and bonuses the company planned to give out. Thursday's settlement resolves all allegations made by the SEC.
Bank of America will pay a $150 million civil penalty that will be distributed to shareholders, and $1 million to Cooper's office for consumer protection purposes.
"I've talked with the new leadership of Bank of America and I appreciate their continued commitment to North Carolina and their willingness to resolve this dispute in a positive way," Cooper said.
"We still have much work to do to make sure consumers are treated fairly by all financial institutions."
Bank of America said it was pleased to reach the agreement, which includes several reforms. Those reforms require the company to employ an independent auditor to assess the company's disclosure procedures and publish incentive compensation principles on its Web site.
The settlement must be approved by a federal judge.
Two Ohio pension funds and a Texas pension fund are amonth the lead plaintiffs in a separate suit against Bank of America.
The class action suit says Bank of America agreed to allow Merrill Lynch to pay up to $5.8 billion in executive bonuses after the merger but did not tell its shareholders. Merrill Lynch ended up paying out $3.6 billion in executive bonuses.
Also, Bank of America did not warn its shareholders of Merrill Lynch's heavy losses during the fourth quarter of 2008, though Bank of America's executives knew of them, the complaint said.
After a shareholder vote, Bank of America continued to withhold the information, the complaint said.
From Legal Newsline: Reach John O'Brien by e-mail at email@example.com.