In a letter to SEC Chairwoman Mary Schapiro, Kucinich asked that the SEC look at whether Bank of America Corp. (BofA) violated securities laws by not disclosing Merrill Lynch & Co.’s plan to pay $3.62 billion of bonuses to top executives, Reuters reported. The bonuses are currently under investigation by New York Attorney General Andrew Cuomo (see “Cuomo Says Merrill Accelerated Bonus Payments’).
Kucinich said in his letter there were “significant questions” surrounding BofA’s failure to disclose bonus details before shareholders voted on the bank’s acquisition of Merrill last December 5, according to the news report.
He asked the SEC to decide whether the bank’s actions constituted a “material” omission, and whether it might order the bank, prior to its April 29 annual meeting, to provide to shareholders the agreement containing bonus details, according to Reuters. In a March 29 response to an inquiry from Kucinich, BofA said it disclosed everything that was required prior to the shareholder vote—and that it was not required to disclose details it then knew about the size and timing of the bonuses.
“There is no question that any reasonable Bank of America shareholder would have considered the Merrill bonuses to be material to their decision on whether to approve the merger,” wrote Kucinich, chair of the House Domestic Policy Subcommittee. “It is the SEC’s responsibility to investigate and prosecute such abuses.”
Recent news reports found that some Bank of America shareholders are trying to oust BofA CEO Kenneth Lewis and two other board members for not protecting the interests of shareholders during the purchase of Merrill Lynch, including by misleading and not providing proper disclosure to shareholders (see “Some BofA Shareholders Want Lewis Out’).
According to his Web site, Kucinich sent out a round of letters to top Treasury officials last week, questioning how much they knew about bonuses paid to Merrill Lynch. Kucinich said the payouts made up more that 36% of the Troubled Asset Relief Program (TARP) funds the financial institution received from the Federal government.
BofA has received an additional $20 billion from TARP funds, in addition to the $25 billion it already received.
Kucinich said that “unlike AIG, the bonuses were not locked in by preexisting contracts and were performance bonuses, as opposed to retention bonuses.’