Bank of America Fined $33 Million: This Is Justice?

Here’s the story: The Securities and Exchange Commission (SEC) accused Bank of America of concealing information from investors regarding bonuses paid to Merrill Lynch execs prior to the Bank’s take-over of Merrill. Bank of America has settled the issue by paying $33 million to the federal government, without admitting any wrongdoing. SEC officials say this is the largest penalty ever imposed for a failure to disclose relevant information in connection with shareholder votes. It’s almost too obvious to say, but I’m saying it anyway, because it is an important part of the story: The $33 million is paid by the owners of Bank of America, its stockholders.

So, as I read the story, the SEC says that Bank of America executives concealed information from its shareholders prior to the shareholder vote to merge, harming those shareholders. Therefore, the same shareholders who were harmed by the concealment now have to pay another $33 million. Is this justice?

Randall G. Holcombe is a Research Fellow at the Independent Institute, the DeVoe Moore Professor of Economics at Florida State University, and author of the Independent Institute book Liberty in Peril: Democracy and Power in American History.
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