The Securities and Exchange Commission announced Tuesday that it has filed new charges against Bank of America Corp. for failing to disclose extraordinary financial losses at Merrill Lynch prior to a shareholder vote approving the acquisition of Merrill.
The SEC experienced a slight hiccup in the process, as U.S. District Court Judge Jed Rakoff denied the agency its attempt Monday to add charges to the existing civil suit against the bank. Rakoff decided that the addition would confuse jurors, but he said the agency could file separate charges.
The first hearing is scheduled to being in March 1.
The issue stems from BofA’s acquisition of Merrill Lynch at the height of the financial crisis last fall. The agency says that despite revised forecasts about Merrill’s looming losses, senior management and in-house counsel “erroneously concluded that no disclosure was necessary because the projected quarterly loss was within the range of losses that Merrill had sustained in the preceding five quarters.” However, the SEC isn’t making any charges against individual executives or lawyers involved in the negotiations.
In September, Rakoff had shot down a controversial settlement between Bank of America and the SEC over the bonuses paid to Merrill Lynch employees last year. Rakoff found that the settlement reached on August 3, under which BofA would pay the SEC a $33 million fine, was unfair to BofA’s shareholders.
An SEC spokesman would not comment beyond the public release. A Bank of America spokesman did not return a phone call.
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