Having had their original settlement with the Securities and Exchange Commission rejected by United States District Court judge Jed S. Rakoff, Bank of America (NYSE:BAC) announced it has now entered into a proposed settlement with the SEC, which will be resubmitted to Judge Rakoff for a decision.
The case centers around the merger by Bank of America with Merill Lynch where it was asserted they didn’t give shareholders the information needed to make an informed vote on the merger at that time. Bonuses offered to employees at Merrill Lynch were the key element surrounding the case.
If the settlement is accepted by Judge Rakoff, Bank of America would be required to pay a civil penalty of $150 million, which shareholders would have spread out among them under the SEC’s Fair Fund program.
As with the first settlement deal and negotiations, it was found that there were no individuals at Bank of America which were attempting to mislead anyone, as they were acting under the direction of their legal counsel.
Bank of America said this in a press release:
“Bank of America is pleased to have come to these agreements with its regulators, and the company looks forward to continuing to pursue its primary mission of providing high quality financial solutions to help customers meet their goals and help the economy grow.
“After conducting a full investigation in connection with the actions settled today, the SEC staff has determined that no one acted with any intent to mislead and that charges against individuals for their roles in connection with proxy disclosure are not appropriate.”
Below are some of the other aspects related to the proposed settlement between Bank of America and the SEC as revealed in the press release:
•Engage an independent auditor to perform an assessment and provide an attestation report on the effectiveness of the company’s disclosure controls and procedures.
•Furnish management certifications signed by the CEO and CFO with respect to proxy statements.
•Adopt independence requirements beyond those already applicable for all members of the compensation committee of the company’s board of directors.
•Implement and disclose written incentive compensation principles on the company’s Web site and provide the company’s shareholders with an advisory vote concerning any proposed changes to such principles.
•Provide the company’s shareholders with an annual “say on pay” advisory vote regarding the compensation of executives.
It does need to be remembered that the deal hasn’t been accepted by the judge presiding over the case, but it looks like it has a good chance at being approved.
As far as the included requirements above (among others), they will be maintained and followed by the company for over a period of three years.
