While seeking stockholder approval of the deal to acquire Merrill Lynch, the Bank of America told its shareholders that Merrill would not pay year-end bonuses to its executives. But the bank had actually already reached a deal with Merrill Lynch that allowed it to pay $5.8 billion dollars in bonuses. This type of information must be disclosed under financial regulations but was not.
The Securities and Exchange Commission found that the stockholders of BoA were intentionally misled (lied to) when they were told that no bonuses would be paid to the Merrill executives. Bank of America agreed to pay US regulators a $33-million-dollar fine for misleading its investors about billions of dollars in bonuses.
If BofA lies to it’s own owners (shareholders) of the Bank, what type of treatment would its customers expect to receive? This is an example of why people should not seek objective financial advise from a bank but should look for the protection of the fiduciary standards of a Registered Investment Advisor.