SEC Has Widened Probe Into BofA, Merrill Deal

MARCY GORDON

WASHINGTON (AP) — The Securities and Exchange Commission has expanded its probe of Bank of America to include the bank's possible failure to disclose mounting losses at Merrill Lynch, a top agency official said Friday.

The SEC has been pursuing civil charges against Bank of America over the failed disclosure to shareholders of bonuses to Merrill employees after it was acquired by the second-largest U.S. bank.

But when Ohio Democratic Rep. Dennis Kucinich asked at a hearing whether the agency has widened its investigation to include the disclosure of losses at Merrill, SEC Enforcement Director Robert Khuzami said: "That's a yes."

The SEC has been "and (is) looking at all aspects" related to Bank of America's disclosures to shareholders before the merger was approved last December, Khuzami said.

The agency "will continue to vigorously pursue our charges against Bank of America and take all necessary steps in an effort to prove our case in court," he said.

A federal judge threw out a proposed $33 million settlement in September and rebuked the SEC for not pursuing charges against individual executives of Bank of America Corp.

As the litigation proceeds, "We may get additional information and we'll take that into account in making our decision," Khuzami said. He noted that a higher level of proof, showing knowledge or reckless conduct, is required to make a case against individuals as opposed to companies.