Bank of America is set to pay $33 million to settle an SEC suit over its failure to disclose to shareholders that it authorized a 2008 bonus payout of up to $5.8 billion for Merrill Lynch executives, according to several news reports.
The Securities & Exchange Commission sued Bank of America on Aug. 3 for not having informed investors about bonuses the government said the nation's largest bank agreed to pay to Merrill Lynch executives as part of the bank's $50 billion acquisition of Merrill last January.
Separately, BofA announced a series of management changes, which include the hiring of former Citigroup Smith Barney executive Sallie Krawcheck and the departure of consumer banking head Liam McGee. Krawcheck will also be a member of the bank's executive management team.
"Considering these challenges and working closely with our board, I reviewed the management team and have decided to make some changes, bringing new talent into the team and adding new perspectives. These changes also position a number of senior executives to compete to succeed me at the appropriate time," says BofA CEO and President Ken Lewis.
In settling the case, Bank of America neither admitted or denied the SEC charges.
On August 3, Bank of America announced that Krawcheck, a veteran of both Sanford Bernstein and Citigroup, will join as head of BofA's global wealth and investment management group. Krawcheck replaced Brian Moynihan, who will now lead consumer banking for BofA.
"I am excited that Sallie Krawcheck has agreed to join our company," Lewis explains. "She is acknowledged to be one of the premier executives in the wealth management industry. Her experience and perspective will lead that business to the next level."
Krawcheck, 44, was previously CEO of global wealth management at Citigroup, which included Smith Barney, the Citi Private Bank and also the Citi equity research division. She has also served as chief financial officer of Citigroup. Earlier, she was chairman and chief executive officer of Sanford C. Bernstein & Co., Inc., and an executive vice president of Bernstein's parent company, Alliance Capital Management, LP, responsible for managing research, brokerage, and trading operations, as well as its business development and planning.