2 Min Read
WASHINGTON (Reuters) - Bank of America (BAC.N) agreed to pay $7.65 million on Monday to settle civil charges alleging it miscalculated its regulatory capital for years, leading to an overestimate that eventually reached billions of dollars, U.S. regulators said Monday.
The bank said in April that it had discovered that it had overstated its capital levels by $4 billion, an error that caused the bank to suspend its plan to repurchase shares and raise its dividend for the first time since the financial crisis. The miscalculation stemmed from a portfolio of structured notes that the bank inherited as part of its 2009 acquisition of Merrill Lynch and went on until the bank found the error in April.
The size of the penalty reflected the fact that Bank of America brought the matter to regulators' attention and took steps to correct the issue, SEC Director of Enforcement Andrew Ceresney said in a statement.
A Bank of America spokesman declined to comment on the settlement.
Bank of America hired a third party to review its capital-planning processes before it resubmitted a request to regulators in May to pay out more dividends to shareholders. The dividend increase to $0.05 per share from $0.01 per share was approved in August.
Monday's settlement with Bank of America is the second case the SEC has brought against a financial institution in recent months concerning problems related to acquisitions during the financial crisis. British bank Barclays (BARC.L) was hit with a $15 million fine on Sept. 23 for inadequate internal compliance systems following its takeover of the U.S. operations of Lehman Brothers in Sept 2008.
Reporting by Sarah N. Lynch; Editing by Doina Chiacu, Bernard Orr