Bank of America asks judge to OK $33 million fine

— -- Bank of America, asking a judge to let it settle a regulator's claims it misled investors while buying Merrill Lynch, on Monday said a $33 million fine is sufficient because it would have had "powerful defenses" at trial.

Though the Securities and Exchange Commission faults the bank's disclosures, it was "widely understood" that Merrill planned to pay billions of dollars to employees at the end of 2008, BofA said in a brief to U.S. District Judge Jed Rakoff. BofA said it is agreeing to settle to avoid a regulatory dispute, but didn't identify any executive involved in alleged misconduct.

Judge Rakoff refused to sign off on the accord earlier this month, demanding more information to ensure the penalty is appropriate. The settlement would resolve claims that BofA didn't tell investors it had agreed to let Merrill pay up to $5.8 billion in employee bonuses and incentives.

"Bank of America determined to reach a settlement with the SEC, so that Bank of America would not face the unnecessary distraction of a protracted dispute with one of its principal regulators," the Charlotte-based company said. The SEC dispute arose "at a time when the financial industry continues to face difficult challenges stemming from uncertain and turbulent market conditions."

A November 2008 joint proxy statement for the acquisition said that Merrill had agreed not to pay year-end performance bonuses or other incentive pay to executives before the deal's closing without BofA's consent, the SEC wrote in an Aug. 3 lawsuit. Unknown to shareholders, such a schedule was already in place, allowing up to $5.8 billion in payments, the SEC said. Merrill later distributed $3.6 billion, even as its annual loss widened to a record $27.6 billion.

The accord lacks "transparency," Rakoff said at an Aug. 10 hearing. He asked who at the bank was responsible for failing to make the bonus disclosures. He told BofA and the SEC to submit further filings by Monday, and said he won't be able to approve a settlement before Sept. 9.