Bank of America has agreed to pay $7.65 million to settle charges that it overstated its capital levels because of incorrect accounting from its 2009 acquisition of Merrill Lynch.
The Charlotte, N.C., company assumed a portfolio of structured notes and other financial instruments when it acquired Merrill Lynch. Bank of America incorrectly recorded the inherited notes at a discount to par, which led to the regulatory capital overstatement, the SEC said. The company was supposed to deduct realized losses on the notes as they occurred, because it redeemed the notes at par.
The mistake was a result of internal accounting control deficiencies, and books and records failures, the SEC said. Jerry Dubrowski, a Bank of America spokesman, declined to comment.
The financial penalty announced on Monday apparently would have been higher if not for Bank of America cooperating with the probe.
"Bank of America self-reported its regulatory capital overstatements, remediated the issues quickly and cooperated in our investigation," Andrew Ceresney, the SEC's enforcement director, said in a release. "This penalty reflects credit for that cooperation."