The FBI and US Department of Justice (DOJ) are conducting a criminal probe into Bank of America Corp’s purchase of Merrill Lynch last year, the Charlotte Observer reported on Friday.
The investigation has been under way for six months, the newspaper reported on its Web site.
A spokesman for the bank declined to confirm whether the FBI or DOJ were investigating. Spokesmen for the FBI and DOJ neither confirmed nor denied that a probe was under way.
The bank is also being investigated by other authorities including the New York Attorney General’s office, which has been drafting charges against bank officials over accusations that they misled shareholders about losses and bonus payments at the investment bank.
“We have provided thousands of documents and had numerous meetings with various government agencies regarding the Merrill Lynch transaction,” Bank of America spokesman Scott Silvestri said.
“And we continue to believe that there is no basis for charges against the company or individuals on the management team,” he said.
Jennifer Canada, a spokeswoman for North Carolina Attorney General Roy Cooper, said the state still has an ongoing investigation into Bank of American but that she wasn’t aware of any other probes. The US attorney’s office in North Carolina’s western district declined to comment.
The Securities and Exchange Commission (SEC) reached a settlement of civil fraud charges against the bank last month, after accusing the bank of failing to disclose information to shareholders about bonuses paid to Merrill employees.
However, a federal judge in New York on Monday threw out that settlement, saying it was unfair to shareholders. He also faulted the SEC for not pursuing charges against bank officials and issued a scathing rebuke to the agency. The judge, US District Judge Jed Rakoff, ordered a trial to begin in the case on Feb. 1.
Bank of America agreed to buy Merrill Lynch a year ago this week, at the height of the credit crisis and just as Lehman Brothers was preparing to file for bankruptcy protection. It was later revealed that Merrill, with the knowledge of Bank of America executives, paid Merrill employees US$3.6 billion in bonuses just before the deal closed on Jan. 1, even though the bank lost US$27.6 billion that year.
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