Bank of America settles bonus charges

August 3, 2009 | By Jim Kim

In something of a shocker, Bank of America has agreed to pay $33 million to settle charges that it basically lied when it told shareholders that Merrill Lynch would not pay bonuses without its consent. In fact, as reported by the Washington Post, Bank of America had already authorized Merrill to pay up to $5.8 billion in bonuses to executives for work in 2008.

The SEC contends: "The disclosures in the proxy statement were rendered materially false and misleading by the existence of the prior undisclosed agreement allowing Merrill to pay billions of dollars in bonuses for 2008."

This represents the most explosive charge--and settlement--to shake out of the financial crisis. Certainly, it is a stain on Bank of America and CEO Ken Lewis, even though the bank did not admit or deny guilt as part of the settlement. But there has already been a move afoot to remake the bank's board and now a move is underway to find a successor to Lewis. Unfortunately, any discussion of his legacy will have to include this chapter.

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