SEC BofA Probe Getting Wider

December 11, 2009 ( - The U.S. Securities and Exchange Commission (SEC) said Friday that regulators are investigating the failure of Bank of America Corp. (BofA) to disclose to shareholders as part of its deal to acquire Merrill Lynch, the investment company’s mounting losses.

A Bloomberg news report said the revelation came during testimony from Enforcement Director Robert Khuzami before the House Oversight and Government Reform Committee. “We have been and are looking at all aspects of the activity with respect to the proxy statements including the fourth-quarter losses at Merrill Lynch,” Khuzami testified, according to Bloomberg.

The SEC is already pursuing allegations against BofA in a lawsuit that the bank misled investors about bonus payments while planning to acquire Merrill. U.S. District Judge Jed Rakoff previously tossed out a proposed $33-million settlement in the case (see It’s a No-Go for BofA Settlement with SEC).

“Based on the investigative record that existed at the time, we did not believe that we could fairly and properly assert” accusations against individuals, Khuzami said in his prepared statement, according to Bloomberg. “We have used the additional discovery available in the litigation to further pursue the facts and determine whether it is appropriate to seek additional charges.”

The bank, the biggest U.S. commercial lender, has said in court papers that it did nothing wrong and agreed to settle to avoid unwanted litigation with an important regulator.