The Securities and Exchange Commission on Monday defended a $33 million settlement reached with Bank of America over allegations the bank didn't tell investors about $3.6 billion in bonuses paid to Merrill Lynch employees.
In a filing in federal district court Monday, the SEC maintained the $33 million settlement was "fair, reasonable, adequate, and squarely" in the public's interest. The SEC said the penalty "strikes the right balance" between the agency's goals of deterring others from committing similar violations and preventing "unnecessary harm to innocent shareholders."
In addressing U.S. District Judge Jed S. Rakoff's question whether the penalty was too low given the $3.6 billion in bonuses paid, the SEC said the bonuses themselves weren't the issue, but rather the lack of disclosure about them. Therefore, the SEC said, the size of the bonuses isn't a "proper gauge" for measuring the gravity of the violation and the penalty.
The agency said its investigation didn't support additional charges against the bank or charges against individuals. The bank and Merrill Lynch both said they relied on their lawyers to draft the documents.
