Bank of America must allow shareholder vote on breakup: SEC letter
By Sarah N. Lynch
WASHINGTON (Reuters) - Bank of America (BAC.N: Quote) must allow shareholders to vote on a proposal that calls for the company to consider spinning off its investment banking business, after U.S. regulators told the bank it cannot exclude the proposal from its corporate ballot.
The March 17 decision by the Securities and Exchange Commission, seen by Reuters Wednesday, marks a victory for Bartlett Naylor, a Bank of America shareholder who works for the non-profit Public Citizen.
It also represents a reversal for the SEC, which last year rejected nearly identical resolutions filed by Naylor at Bank of America, as well as JP Morgan Chase (JPM.N: Quote) and Citigroup (C.N: Quote). It also has rejected similar plans by other groups in the past.
Bank spokesman Lawrence Grayson said the bank "will respond to the proposal in our proxy statement. We do not believe that creating a separate subcommittee on shareholder value is necessary."
He said the board "focuses on shareholder value and regularly analyzes these issues. We have reduced the size of the company by hundreds of billions of dollars as we have streamlined and simplified our business model."
Earlier this month, the SEC rejected a bid by Citigroup, Goldman Sachs (GS.N: Quote) and Morgan Stanley (MS.N: Quote) to block a proposal by the AFL-CIO seeking disclosure of so-called "golden parachutes" executives can earn if they leave for a government job.
Naylor's shareholder resolution calls for the Bank of America board to consider appointing a committee of independent directors to develop a plan for divesting all of its "non-core" banking activities.
In his supporting statement, Naylor said the plan was inspired by the 2007-2009 financial crisis in which the government bailed out mega banks due to soured mortgages and risky derivatives bets. Continued...