Bank of America, SEC face judge today in settlement hearing
Bank of America and the Securities and Exchange Commission will face a federal judge today after he refused to sign off on their $33 million settlement agreement. The SEC sued the bank last week on allegations it misled shareholders about executive bonuses at Merrill Lynch. WFAE's Simone Orendain has more. The SEC says Bank of America hid from shareholders the fact that it gave Merrill Lynch permission to payout up to $5.8 billion in bonuses. This was before the two companies merged. Bank of America settled with the regulator and did not acknowledge any wrongdoing. US District Judge Jed Rakoff says in his order that the allegations against the bank were too serious to let the settlement stand without further explanation. UNC Charlotte Finance Professor Tony Plath calls this "highly unusual." He says, "It's a sufficiently important issue in American corporate legal history that we need an answer to the question of did the bank withhold information and did the bank communicate misleading information to its shareholders." Plath says the judge could very well force the bank to definitively admit or deny wrongdoing. If it does, he says this will help regulators in their investigation of whether Bank of America CEO Ken Lewis was upfront with shareholders about Merrill's massive losses before they voted to approve the acquisition. Bank of America says it looks forward to answering the judge's questions about the settlement.