SEC, Bank of America defend bonus settlement

WASHINGTON — The Securities and Exchange Commission and Bank of America Corp. on Monday defended the fairness of their proposed $33 million settlement over executive bonuses paid out by Merrill Lynch, and the bank maintained it didn't mislead investors in the affair.

In a court filing, Bank of America suggested that shareholders should already have known about the $3.6 billion in bonuses given the media attention surrounding its takeover of Merrill after it was first announced last September.

"There was no false or misleading statement or omission" in a proxy statement for voting shareholders, Bank of America said in its filing to U.S. District Judge Jed Rakoff in Manhattan, who has held up approving the settlement. In addition, the bank noted that Merrill disclosed the size of its bonus pool when it reported financial results earlier in 2008.

With their separate filings, the SEC and Bank of America met the Monday deadline set by Rakoff two weeks ago for them to provide fuller information so that he can decide whether to approve the settlement announced Aug. 6. After a period of review, Rakoff could rule or order additional hearings.

The SEC "respectfully submits that the proposed settlement is fair, reasonable, adequate and squarely in the public interest," the agency said in its filing to Rakoff.

The bank, without admitting or denying the allegations, agreed to pay the fine to settle charges that it misled investors about Merrill's plans to pay bonuses to executives even as it prepared to report billions in losses.

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