Updated from 6:21 a.m. EDTThe Securities and Exchange Commission is reviewing whether Bank of America ( BAC) broke the law by not telling shareholders about Merrill Lynch's plan to pay out $3.6 billion in bonuses before shareholders voted for a government-backed merger of the two banks, a report says. Merrill paid the bonuses in December, days before it was acquired by BofA, and a month before bonuses were normally handed out. The Charlotte, N.C.-based company said it wasn't required to tell its shareholders about the bonuses, the Financial Times reports. But Mary Schapiro, head of the SEC, wrote in a letter to a Democratic congressman that the regulator was "carefully reviewing the Bank of America disclosure" and had not yet expressed a view on whether the bonus plan should have been revealed, the newspaper reports. Last week, Rep. Dennis Kucinich (D., Ohio), chairman of an investigative House subcommittee, wrote a letter to the SEC asking whether BofA should have told its shareholders about the bonuses. He has also demanded that the Treasury and Federal Reserve reveal what they knew about the plan, given their close involvement in the merger discussions. In response to Kucinich, Schapiro wrote: "Where the SEC believes that there has been an omission of material facts necessary in order to make the statements not misleading, we will carry out our enforcement responsibilities with vigor and vigilance," the Financial Times reports. Change to Win, a federation of unions representing nearly six million workers in the U.S., wants an audit done on the financial services industry to determine whether institutions abused TARP funding to protect bonus programs from legislative reform.
"News reports fuel cynicism that American tax dollars are doubly wasted by paying executive bonuses and then lobbying to protect those executive bonuses," Change to Win chair Anna Burger said in a letter dated Tuesday to the Office of the Special Inspector General for TARP. "We believe
the Inspector General should address this cynicism either to lay it to rest, or provide the details that can inform necessary reforms," the letter said. Change to Win wants the TARP Inspector General to specifically probe whether Bofa and Merrill Lynch used lobbying resources in defense of the bonus pool and whether these firms can show that "no TARP funds were used for its political efforts regarding the bonuses." In addition, Change to Win wants to know the role played by the Financial Services Roundtable and whether membership dues for the organization and other Wall Street lobbyists were funded by TARP. The Financial Services Roundtable is comprised of leaders of the top financial institution executives. Staff writer Laurie Kulikowski contributed to this report.