(CN) – The Securities and Exchange Commission defended Bank of America’s proposed $33 million settlement over the billions in bonuses paid to Merrill Lynch executives as “fair, reasonable, adequate and in the public interest.”
The SEC filed a statement in response to the skepticism expressed by U.S. District Judge Jed Rakoff last month. Rakoff ordered the SEC to explain its “puzzling” decision not to bring charges over allegedly misleading proxy statements.
The SEC had accused Bank of America of failing to tell shareholders that it had authorized Merrill Lynch to pay discretionary bonuses of up to $5.8 billion. Merrill Lynch ended up paying $3.6 billion in executive bonuses, though Bank of America allegedly told shareholders that no such bonuses would be paid without the bank’s consent.
The SEC stuck by its earlier explanation that attorney-client privilege blocked it from investigating the executives’ culpability, because any probe would require delving into records of private discussions between executives and attorneys.
Though the records “might shed light” on why Bank of America failed to mention the agreement in its proxy statements, the SEC said, the executives haven’t waived their attorney-client privilege.
It also reiterated that it doesn’t have enough proof to charge individual executives or the bank on anything beyond the alleged proxy violations.
But the agency again pressed the court to approve the settlement.
“The penalty here will send a clear message that the failure to disclose the substance of a separate schedule that materially qualifies or contradicts representations in a proxy statement is unacceptable,” the SEC wrote.