Bank of America Corp. is paying US$33 million to settle charges from the U.S. Securities and Exchange Commission, which is alleging that BofA misled investors about billions of dollars in bonuses that were being paid to Merrill Lynch & Co. executives at the time of its US$50-billion acquisition of the firm.

The SEC alleges that in proxy materials soliciting the votes of shareholders on the proposed acquisition of Merrill, BofA stated that Merrill had agreed that it would not pay yearend performance bonuses or other discretionary compensation to its executives prior to the closing of the merger without BofA’s consent. “In fact, Bank of America had already contractually authorized Merrill to pay up to US$5.8 billion in discretionary bonuses to Merrill executives for 2008,” the SEC said.

According to the SEC’s complaint, the disclosures in the proxy statement were rendered materially false and misleading by the existence of the prior undisclosed agreement allowing Merrill to pay billions of dollars in bonuses for 2008.

In settling the SEC’s charges without admitting or denying the allegations, BofA consented to the entry of a judgment that permanently enjoins BofA from violating the proxy solicitation rules and orders BofA to pay the US$33-million financial penalty. The settlement is subject to court approval.

In a separate move, BofA also announced a senior management shakeup, that will see, among other things, the current head of the firm’s investment-banking and wealth-management divisions take over the consumer banking business, and the addition of former Citigroup executive Sallie Krawcheck to run the wealth-management and investment-management businesses.

“These changes are designed to drive enhanced performance and to ensure that our strategies and franchise are positioned for maximum success in the coming years,” said president and CEO, Ken Lewis. “We have all the pieces of the puzzle in place to be the leading financial services firm in the world. Our mission is to take advantage of our position to create value for all our constituencies from shareholders to clients.

“Changes in the structure and requirements of the financial services industry are causing us to reengineer businesses. Customer behaviour is evolving, requiring new products, services and delivery methods,” Lewis added. “We are a much more global company with the addition of Merrill Lynch. We are working hard to get through our credit issues, and to maintain and even enhance our earning power even as we prepare for performing after the recession.”