The infamous “disclosure schedule”

August 24, 2009

At the bottom is the SEC’s latest brief for Judge Rakoff.

Having gone through BofA’s, one finds –publicly disclosed for the first time — the “disclosure schedule” that outlined bonuses BofA had agreed Merrill could pay:

“Variable Incentive Compensation Program (‘VICP’) in respect of 2008 … may be awarded at levels that (i) do not exceed $5.8 billion in aggregate value (inclusive of cash bonuses and the grant date value of long-term incentive awards)…

It’s also on page 10 of the SEC’s brief.

Why does this matter?  Because this is the language that BofA conveniently forgot to include in the SEC filing detailing the merger before it was approved.

BofA’s argument is that even though the filing said Merrill couldn’t pay bonuses without its consent, the fact that the filing referenced the disclosure schedule means shareholders should have been aware Merrill would pay bonuses anyway.

You’d think shareholders would want to see something like that. So why wasn’t the schedule included in the SEC filing?

[BofA CEO Ken] Lewis, [fomer Merrill CEO John] Thain and [former Merrill COO Greg] Fleming were all asked by [SEC] staff why this information was set forth in a disclosure schedule as opposed to the text of the merger agreement itself, but none of them could provide an answer.

But of course they couldn’t.

There’s much more in the brief.

(For easier reading, click “toggle full screen” top-right and then “+” to zoom in)

SEC BRIEF – 8-24-09

One comment

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What a tangled web we weave, when we endeavour to deceive.

Posted by TWM | Report as abusive

[…] deal between the SEC and Bank of America. He clearly wasn’t happy with it to begin with, and subsequent briefs from the two parties did nothing to allay his concerns. At the end of the day, he hated the […]

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