Department of justice, FBI probe into BoA’s Merrill Lynch acquisition
19 Sep 2009
The US department of justice and the Federal Bureau of Investigation (FBI) are conducting an enquiry on Bank of America's (BoA) purchase of troubled brokerage firm Merrill Lynch, the CharlotteObserver.com reported today
The probe has been underway for six months, the report said.
It was revealed that Merrill, with the knowledge of BoA executives, paid Merrill employees $3.6 billion in bonuses just before the deal closed, despite a huge loss of $27.6 billion that year.
BoA already faces investigations from the New York attorney general's office, the Securities and Exchange Commission and the North Carolina attorney general's office, since its acquisition of Merrill Lynch for $29 billion. (See: Bank of America buys Merrill Lynch)
In some lawsuits filed in New York and Georgia, BoA shareholders challenged the bank's acquisition last September of the Merrill Lynch saying that the bank has misled them about the deal and failed to disclose the true financial health of the brokerage firm at the time of the acquisition (See: Shareholders see red in BoA-Merrill deal; sue bank).
Those probes have largely focused on the payment of billions in Merrill bonuses before the deal closed and the lack of disclosure of Merrill's ballooning fourth-quarter losses.
