BofA, SEC to file details on Merrill Lynch bonuses

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After enduring the courtroom equivalent of a tongue-lashing from a federal judge two weeks ago, Bank of America Corp. and the Securities and Exchange Commission are expected today to detail the logic behind their controversial settlement over bonuses at Merrill Lynch & Co.

The bank and the agency are scheduled to file briefs responding to U.S. District Judge Jed Rakoff’s criticism of the proposed $33 million settlement.

BofA agreed to settle an SEC lawsuit alleging that it led shareholders to believe that Merrill would not pay year-end bonuses last year. In fact, the bank had already approved $5.8 billion in bonuses at Merrill, which it was in the process of acquiring at the time, and Merrill eventually doled out $3.6 billion in payouts.

Rakoff blasted several key elements of the settlement, and said he won’t approve it until he gets additional information on several key points.

Among other things, he wants details on whether BofA intentionally misled shareholders about the bonuses, the names of which executives and lawyers approved the bonuses, and on whether shareholders got sufficient information about Merrill’s weakening finances before they voted to approve the merger late last year.

Rakoff also said at the hearing that he was troubled by the proposed settlement amount, saying $33 million could be far too little if BofA was shown to have deceived shareholders.

-- Walter Hamilton

Related: BofA defends settlement over Merrill Lynch bonuses