WASHINGTON (AP) -- Bank of America Corp. has agreed to pay a $33 million penalty to settle government charges that it misled investors about Merrill Lynch's plans to pay bonuses to its executives, regulators said Monday.
In seeking approval to buy Merrill, Bank of America told investors that Merrill would not pay year-end bonuses without Bank of America's consent. But the Securities and Exchange Commission said Bank of America had authorized New York-based Merrill to pay up to $5.8 billion in bonuses.
That rendered a statement Bank of America mailed to 283,000 shareholders of both companies about the Merrill deal "materially false and misleading," the SEC said in a statement.
Bank of America agreed to pay $33 million to settle the charges without admitting or denying the allegations. The settlement is subject to court approval.
"Bank of America believes that the settlement ... represents a constructive conclusion to this issue," company spokesman Scott Silvestri said in an e-mailed statement.
New York Attorney General Andrew Cuomo, who referred the case to the SEC in April, said his investigation is continuing. The SEC said its probe also is ongoing.
Bank of America, along with Citigroup Inc. and insurance giant American International Group, is among the largest recipients of government aid. It has received $45 billion from the federal $700 billion bank rescue program.
Charlotte, N.C.-based Bank of America agreed to purchase Merrill in a deal that was hastily arranged Sept. 13-14, 2008, the same weekend that Lehman Brothers collapsed. Bank of America CEO Ken Lewis and Merrill Lynch CEO John Thain announced the deal Sept. 15.
The acquisition came as Lehman's collapse caused panic in the financial markets and investment banks such as Merrill faced billions of losses on soured mortgage investments.
Merrill ended up paying $3.6 billion in bonuses in 2008, the SEC said, even though it lost $27.6 billion that year, a record for the firm.
Bank of America included a copy of the merger agreement with the proxy statement that it mailed to shareholders of both firms in November. That agreement said Merrill would not pay discretionary bonuses prior to the deal's closing, the SEC said.
A separate agreement authorizing the bonuses wasn't mailed to shareholders, the SEC said.
Shareholders in both companies voted to approve the acquisition Dec. 5, which then closed Jan. 1. The SEC said the bonuses were paid Dec. 31.
"Companies must give shareholders all material information about corporate transactions they are asked to approve," said Robert Khuzami, director of the SEC's enforcement division. "Failing to disclose that a struggling company will pay out billions of dollars in performance bonuses obviously violates that duty.
"The bonuses amount to nearly 12 percent of the $50 billion that Bank of America paid for Merrill.
Separately, Bank of America announced that Sallie Krawcheck, Citigroup's former chief executive of global wealth management, will join the company to run its global wealth and investment management operations.
Krawcheck, 44, also has served as chief financial officer of Citigroup, as chairman and CEO of Sanford C. Bernstein & Co. Inc., and an executive vice president of Bernstein's parent company, Alliance Capital Management LP.
Shares of Bank of America added 53 cents, or 3.6 percent, to $15.32 Monday. The company's stock has traded between $2.53 and $39.50 in the last year
Tuesday, August 4, 2009
Monday, August 3, 2009
Roubini Says Commodity Prices May Rise in 2010
By Rebecca Keenan and Jason Scott
Aug. 3 (Bloomberg) -- Commodity prices may extend their rally in 2010 as the global recession abates, said Nouriel Roubini, the New York University economist who predicted the financial crisis."
As the global economy goes toward growth as opposed to a recession, you are going to see further increases in commodity prices especially next year," Roubini said today at the Diggers and Dealers mining conference in Kalgoorlie, Western Australia. "There is now potentially light at the end of the tunnel.
"Roubini, chairman of Roubini Global Economics and a professor at NYU's Stern School of Business, joins former Federal Reserve Chairman Alan Greenspan in seeing signs of recovery. Commodity prices gained the most in more than four months on July 30 as investors speculated that the worst of the global recession has passed and consumption of crops, metals and fuel will rebound.
"The things he was saying provide good indicators for our business," Martin McDermott, a manager for metals project development at SNC-Lavalin Group Inc., Canada's biggest engineering and construction company, said at the conference. "The commodities that we're involved with, being copper, nickel, gold, iron ore, all seem to have positive signs and we hope to take advantage of that.
"Greenspan said yesterday the most severe recession in the U.S. in at least five decades may be ending and growth may resume at a rate faster than most economists foresee. Oil has jumped 56 percent in 2009 and copper has surged 86 percent.
China Growth Target
Roubini predicted on July 23 that the global economy will begin recovering near the end of 2009, before possibly dropping back into a recession by late 2010 or 2011 because of rising government debt, higher oil prices and a lack of job growth.
Economic growth in China, the world's biggest metals consumer, accelerated in the second quarter, gaining 7.9 percent from a year earlier. China, the biggest contributor to global growth, overtook Japan as the world's second-largest stock market by value on July 16 after the nation's 4 trillion yuan ($585 billion) stimulus package spurred record lending and boosted prices of shares and commodities.
China will meet its target of 8 percent growth in gross domestic product this year, Roubini said. Manufacturing in China climbed for a fifth month in July as stimulus spending and subsidies for consumer purchases countered a collapse in exports, and helped companies from chipmaker Semiconductor Manufacturing International Corp. to automaker General Motors Corp. as well as mining companies such as BHP Billiton Ltd. and Rio Tinto Group.
China's official Purchasing Managers' Index rose to a seasonally adjusted 53.3 in July from 53.2 in June. A reading above 50 indicates an expansion. The manufacturing index has climbed from a record low of 38.8 in November.
Aussie Dollar, Aluminum
A rise in commodity prices may help the Australian dollar, Roubini said today, adding he is "bullish" on the currency. Countries including Australia, New Zealand and Canada have so- called commodity currencies because raw materials generate more than 50 percent of their export revenues.
The Australian dollar today rose to the highest since September before retail sales and house price data tomorrow that may add to evidence the nation's economy will rebound faster than the central bank forecast six months ago.
The price of aluminum, used in beverage cans and airplane parts, has declined by a third in the past year as the global recession crimped demand. A recovery in demand may be offset by the "huge amount of excess capacity," which could be a risk to the price, Roubini said.
The Reuters/Jefferies CRB Index of 19 commodities has risen 12 percent this year. It jumped 3.9 percent on July 30 to 253.14, the biggest gain since March 19.
Slow Recovery
"That recovery will continue slowly, slowly over time," Roubini said today. The global economy may contract 2 percent this year and swing to growth of 2.3 percent next year, he said.
Vale SA, the world's biggest iron ore producer, said demand for metals is starting to recover and it will begin boosting output. Vale Chief Financial Officer Fabio Barbosa said on July 30 that "the worst is over".
The price of oil may rise more than other commodities because of an expected rebound in demand, Roubini said separately in an interview with Bloomberg News. It may average between $70 and $75 a barrel next year, he said.
Oil Prices
Crude oil traded above $70 a barrel today for the first time in a month on speculation fuel demand will increase, amid signs the global economy is recovering from recession.
The U.S. economy, the world's biggest, is likely to grow about 1 percent in the next two years, less than the 3 percent "trend," Roubini said last month. President Barack Obama said on July 30 the U.S. may be seeing the beginning of the end of the recession.
In July 2006 Roubini predicted the financial crisis. In February of last year he forecast a "catastrophic" meltdown that central bankers would fail to prevent, leading to the bankruptcy of large banks with mortgage holdings and a "sharp drop" in equities. Since then, Bear Stearns Cos. was forced into a sale and Lehman Brothers Holdings Inc. went bankrupt, prompting banks to hoard cash and depriving businesses and households of access to capital.
http://www.bloomber g.com/apps/ news?pid= 20601087& sid=aUZbo8LjO3kw
Aug. 3 (Bloomberg) -- Commodity prices may extend their rally in 2010 as the global recession abates, said Nouriel Roubini, the New York University economist who predicted the financial crisis."
As the global economy goes toward growth as opposed to a recession, you are going to see further increases in commodity prices especially next year," Roubini said today at the Diggers and Dealers mining conference in Kalgoorlie, Western Australia. "There is now potentially light at the end of the tunnel.
"Roubini, chairman of Roubini Global Economics and a professor at NYU's Stern School of Business, joins former Federal Reserve Chairman Alan Greenspan in seeing signs of recovery. Commodity prices gained the most in more than four months on July 30 as investors speculated that the worst of the global recession has passed and consumption of crops, metals and fuel will rebound.
"The things he was saying provide good indicators for our business," Martin McDermott, a manager for metals project development at SNC-Lavalin Group Inc., Canada's biggest engineering and construction company, said at the conference. "The commodities that we're involved with, being copper, nickel, gold, iron ore, all seem to have positive signs and we hope to take advantage of that.
"Greenspan said yesterday the most severe recession in the U.S. in at least five decades may be ending and growth may resume at a rate faster than most economists foresee. Oil has jumped 56 percent in 2009 and copper has surged 86 percent.
China Growth Target
Roubini predicted on July 23 that the global economy will begin recovering near the end of 2009, before possibly dropping back into a recession by late 2010 or 2011 because of rising government debt, higher oil prices and a lack of job growth.
Economic growth in China, the world's biggest metals consumer, accelerated in the second quarter, gaining 7.9 percent from a year earlier. China, the biggest contributor to global growth, overtook Japan as the world's second-largest stock market by value on July 16 after the nation's 4 trillion yuan ($585 billion) stimulus package spurred record lending and boosted prices of shares and commodities.
China will meet its target of 8 percent growth in gross domestic product this year, Roubini said. Manufacturing in China climbed for a fifth month in July as stimulus spending and subsidies for consumer purchases countered a collapse in exports, and helped companies from chipmaker Semiconductor Manufacturing International Corp. to automaker General Motors Corp. as well as mining companies such as BHP Billiton Ltd. and Rio Tinto Group.
China's official Purchasing Managers' Index rose to a seasonally adjusted 53.3 in July from 53.2 in June. A reading above 50 indicates an expansion. The manufacturing index has climbed from a record low of 38.8 in November.
Aussie Dollar, Aluminum
A rise in commodity prices may help the Australian dollar, Roubini said today, adding he is "bullish" on the currency. Countries including Australia, New Zealand and Canada have so- called commodity currencies because raw materials generate more than 50 percent of their export revenues.
The Australian dollar today rose to the highest since September before retail sales and house price data tomorrow that may add to evidence the nation's economy will rebound faster than the central bank forecast six months ago.
The price of aluminum, used in beverage cans and airplane parts, has declined by a third in the past year as the global recession crimped demand. A recovery in demand may be offset by the "huge amount of excess capacity," which could be a risk to the price, Roubini said.
The Reuters/Jefferies CRB Index of 19 commodities has risen 12 percent this year. It jumped 3.9 percent on July 30 to 253.14, the biggest gain since March 19.
Slow Recovery
"That recovery will continue slowly, slowly over time," Roubini said today. The global economy may contract 2 percent this year and swing to growth of 2.3 percent next year, he said.
Vale SA, the world's biggest iron ore producer, said demand for metals is starting to recover and it will begin boosting output. Vale Chief Financial Officer Fabio Barbosa said on July 30 that "the worst is over".
The price of oil may rise more than other commodities because of an expected rebound in demand, Roubini said separately in an interview with Bloomberg News. It may average between $70 and $75 a barrel next year, he said.
Oil Prices
Crude oil traded above $70 a barrel today for the first time in a month on speculation fuel demand will increase, amid signs the global economy is recovering from recession.
The U.S. economy, the world's biggest, is likely to grow about 1 percent in the next two years, less than the 3 percent "trend," Roubini said last month. President Barack Obama said on July 30 the U.S. may be seeing the beginning of the end of the recession.
In July 2006 Roubini predicted the financial crisis. In February of last year he forecast a "catastrophic" meltdown that central bankers would fail to prevent, leading to the bankruptcy of large banks with mortgage holdings and a "sharp drop" in equities. Since then, Bear Stearns Cos. was forced into a sale and Lehman Brothers Holdings Inc. went bankrupt, prompting banks to hoard cash and depriving businesses and households of access to capital.
http://www.bloomber g.com/apps/ news?pid= 20601087& sid=aUZbo8LjO3kw
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