The U.S. Securities and Exchange Commission has resolved an impasse over punishing Bank of America Corp. in a mortgage case, clearing the way for the lender to complete a $16.7 billion global settlement, people familiar with the matter said.
In a private meeting yesterday, SEC commissioners voted to waive most of a set of additional sanctions that would kick in when the settlement is entered into court, according to the people, who asked not to be named because the decision hasn’t been made public. The bank did get hit with a penalty that takes away its ability to issue more shares or bonds without SEC approval each time.
The SEC decision came as Bank of America and the agency were reaching a deadline for having a federal judge in North Carolina sign off on the settlement. The two sides had twice sought more time from the court as negotiations dragged on.
The agreement ends a legal headache for Bank of America, which, like most Wall Street firms, has been trying to settle numerous government probes that arose after the 2008 financial crisis. Last week, the bank was one of several companies fined by the Office of the Comptroller of the Currency in connection with a foreign-exchange manipulation investigation.
At the SEC, the hold-up was a 2-2 deadlock between Republican and Democratic commissioners. Chair Mary Jo White, who as a private attorney represented ex-Bank of America Chief Executive Officer Kenneth Lewis, was recused.
John Nester, a spokesman for the SEC, declined to comment, as did Lawrence Grayson, a spokesman for Bank of America.
The penalty waivers, once a routine job handled by staff, have in recent months become a flashpoint at the five-member commission. Democratic Commissioners Luis Aguilar and Kara Stein have pushed to debate many exemptions, arguing that the extra penalties may be appropriate for recidivist Wall Street firms.