Compliance December 1, 2010

Report Says SEC Suit against BofA was Incomplete

A report from Securities and Exchange Commission (SEC) Inspector General David Kotz concludes that in its hurry to bring suit against Bank of America over its Merrill Lynch acquisition, the agency omitted significant violations from its initial charges.
Reported by

ABC News reports that the Inspector General’s investigation found SEC enforcement attorneys felt pressure to bring the case quickly because it was a high-profile issue. It also found that the agency sought a relatively small penalty against Bank of America, $33 million, after investigators initially “relied substantially on case precedent” to arrive at the figure.

According to the news report, a federal judge threw out that settlement amount and the deal was revised early this year to include a $150 million penalty. 

The report acknowledged, however, that the SEC staff operated “ably” under tight deadlines to investigate and bring the case against Bank of America.  

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The suit claimed Bank of America (BofA) Corp., certain officers, and directors concealed intended bonuses and losses at Merrill Lynch & Co after the bank agreed to acquire the investment firm (see Judge Moves Forward Shareholder Claims against Bank of America).  

Among the report’s recommendations is that the SEC review the level of cooperation among law enforcement agencies on investigations and determine where it could be improved. The report said SEC attorneys expressed the view that the office of New York Attorney General Andrew Cuomo, which also conducted an investigation of Bank of America, failed to cooperate fully with the SEC and refused to share some information.
Compliance November 30, 2010

IRS Offers Additional 409A Relief

The Internal Revenue Service has issued Notice 2010-80 providing additional relief for nonqualified deferred compensation plans covered under § 409A.
Reported by

The guidance expands the types of plans eligible for relief under Notice 2010-6, provides an additional method of correction and transition relief under Notice 2010-6 (see IRS Explains How to Fix 409A Document Woes) for certain plan document failures relating to payments at separation from service, and modifies the correction reporting requirements in Notice 2008-113 and Notice 2010-6.  

Specifically, the notice: 

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  • Clarifies that the types of plans eligible for relief under Notice 2010-6 include a nonqualified plan linked to a qualified plan or another nonqualified plan, provided that the linkage does not affect the time and form of payments under the plans; 
  • Expands the types of plans eligible for relief under Notice 2010-6 to include certain stock rights that were intended to comply with the requirements of § 409A(a) of the Internal Revenue Code (rather than be exempt from the requirements of § 409A(a)); 
  • Provides an additional method of correction under Notice 2010-6 for certain failures involving payments at separation from service subject to the requirement to submit a release of claims or similar document; and provides transition relief permitting the correction of such failures that were in effect on or before December 31, 2010 (including relief from the service provider information reporting requirements); 
  • Provides relief from the service provider information reporting requirements under Notice 2010-6 for corrections made under the transition relief ending December 31, 2010; and 
  • Provides relief from the requirement that service recipients provide certain information to service providers under Notice 2008-113 for corrections made in the same taxable year as the failure occurs. 

 

Notice 2010-80 is here.

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