Bank of America executives won’t be charged in Merrill Lynch bonus case

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No one at Bank of America Corp. will face charges for the banking company’s alleged failure to disclose billions in losses at Merrill Lynch & Co.

The Securities and Exchange Commission announced today that it won’t file charges against BofA executives in connection with the company’s ill-fated purchase of the troubled investment bank last year.

In a statement, the SEC alleged that the bank negligently failed to tell shareholders about “extraordinary financial losses” at Merrill before their approval of the deal.

However, there is no evidence that BofA executives or their lawyers deliberately withheld that information or sought to mislead shareholders, the SEC said.

“After a careful assessment of the evidence and all of the relevant circumstances, it has determined that charges against individuals for their roles in connection with proxy disclosure are not appropriate,” the SEC said in the statement.

The decision not to pursue the executives is only the latest twist in a saga that has become a black mark for both the SEC and the banking giant.

Last August, the SEC tried to fine the company $33 million for allegedly failing to disclose $5.8 billion in bonuses to Merrill executives that were part of the deal.

But a federal judge in New York excoriated the SEC for not investigating the case more thoroughly and for not cracking down more harshly if it believed that BofA had intentionally withheld information from shareholders.

U.S. District Judge Jed Rakoff refused to approve a legal settlement that the SEC had worked out with the bank and instead ordered that the SEC pursue its allegations in a trial that’s now set to begin March 1.

In its statement, the SEC said it requested permission to file additional charges against BofA itself for alleged negligence in not revealing the losses to shareholders before their December 2008 vote approving the deal.

BofA knew before the vote that Merrill had lost $4.5 billion in October and billions more in November, according to the SEC.

The losses amounted to one-third of the value of the deal and revealing them was “essential,” the SEC said.

Yet BofA “erroneously and negligently concluded that no disclosure concerning these extraordinary losses was required,” the SEC said.

BofA said in statement that it is “pleased that the SEC, after investigating the matter thoroughly, has found no basis to charge any individuals at Bank of America or to assert a charge of fraud.”

Rakoff ruled late today that the SEC could not add the new charges against the company so soon before the case goes to trial. The SEC would have to file a separate lawsuit to pursue the new charges.

-- Walter Hamilton