Bank of America (BAC) on Wednesday was ordered to rehire and pay $930,000 to a whistleblower who had exposed improprieties at Countrywide Financial. The U.S. Department of Labor ruled BofA violated the whistleblower-protection provisions of Sarbanes-Oxley by improperly firing an employee. The payment includes back wages, interest, compensatory damages and attorney fees.
The findings came after an investigation by the Occupational Safety and Health Administration’s office in San Francisco, which was initiated after it received a complaint from the Los Angeles-area employee.
"It's clear from our investigation that Bank of America used illegal retaliatory tactics against this employee," said OSHA Assistant Secretary David Michaels in a press release. "This employee showed great courage reporting potential fraud and standing up for the rights of other employees to do the same."
The employee originally worked for Countrywide Financial, which merged with BofA in July 2008. The employee led internal investigations that revealed widespread and pervasive wire, mail and bank fraud involving Countrywide employees. The employee alleged that those who attempted to report fraud to Countrywide's Employee Relations Department suffered persistent retaliation. The employee was fired shortly after the merger.
"Whistleblowers play a vital role in ensuring the integrity of our financial system, as well as the safety of our food, air, water, workplaces and transportation systems," added Michaels. "This case highlights the importance of defending employees against retaliation when they try to protect the public from the consequences of an employer's illegal activities."
Bank of America has a month to appeal can appeal the monetary damages to the Labor Department.
"This is an old matter dating from 2008. We are disappointed with the ruling and plan to exercise our option to challenge the order," BofA said in a statement. "The bank’s actions to dismiss were solely based on issues with the employee’s management style and in no way related to the employee’s complaints and the allegations made in the complaint."
"Bank of America encourages associates to raise issues they see. We take such escalations seriously and investigate them thoroughly. We thoroughly investigated the claims made in this case while the associate was still employed and took the appropriate action," it added. "We do not take actions against associates who raise issues."
The bank "always takes allegation of fraud seriously," the statement continued. "The allegations referenced in this complaint were investigated and the appropriate actions taken."
BofA Merrill Lynch Adds $18B in Assets
In other news, Bank of America Merrill Lynch Retirement Services said early Thursday that it had added about $18 billion in new financial benefit-plan assets through new and existing relationships with companies of all sizes in the first eight months of 2011.
“Through such unprecedented growth, as of the midway point in the year (6/30/11), the business had already surpassed record asset growth achieved during full year of 2010,” the company said in a statement.
The growth in 2011 includes $13.1 billion in assets from more than 350 new benefit plans for middle market and large companies, according to BofA. Sales momentum with larger employers has been “particularly strong,” representing $10 billion of these new assets, the bank says.
Among small businesses, BofA had added $4.8 billion in new retirement-plan assets, including growth within Advisor Alliance.
Introduced in 2001, Advisor Alliance provides small businesses with Merrill Lynch investment and advisory services, as well as record-keeping and retirement-plan administration services from alliance partners.
Since early 2009, the program has grown from $17 billion in total assets to more than $25 billion as of the end of August 2011, BofA says. This year it has seen $2.9 billion in new assets enter the program, a 30% increase compared to the same period last year.
Also on Thursday, BofA agreed to sell nearly 81 million shares of HCA Holdings back to the health-care company for $1.5 billion.
Merrill Lynch acquired about 15.5% of HCA for about $1 billion in 2006, and BofA says the bank has made about $3 billion from the investment, according to several reports.
On Monday, BofA announced plans to cut 30,000 workers over the next few years and trim $5 billion a year in costs. It reorganized management last week, and Sallie Krawcheck was let go as head of wealth management.