NEW YORK (Reuters) –
Bank of America Corp (BAC.N) formally denied U.S. Securities and Exchange Commission claims accusing it of misleading shareholders about bonuses it let Merrill Lynch & Co pay employees before the companies' January 1merger, and said it is seeking an order dismissing the regulator's complaint.
The bank's response, in a Friday filing, was expected, and came 11 days after U.S. District Judge Jed Rakoff rejected its $33 million settlement with the SEC over the $3.6 billion of bonus awards.
Rakoff, who is still handling the case, was upset that the accord did not require disclosure of the names of executives and lawyers who vetted the bonuses and the decision not to disclose them, and yet left shareholders on the hook for a fine. He called the settlement a "contrivance" that violates "the most elementary notions of justice and morality."
In its answer to the SEC's complaint, Bank of America maintained that the proxy statement for the merger did not contain false or misleading statements, or omit key facts. It also said it was not negligent in preparing the proxy statement.
SEC spokesman John Heine said: "As we alleged in our complaint, Bank of America did not provide investors with complete and accurate information about the bonuses to be paid by Merrill Lynch to employees."
"We intend to prove in court that their disclosure failure violated the federal securities laws," said Heine.
Earlier this week, Rakoff agreed to a schedule to bring the case to trial by March 1, 2010, one month later than he earlier had wanted. He called the March 1 date "firm and fixed."
Bank of America, based in Charlotte, North Carolina, faces many lawsuits and investigations by lawmakers and regulators over the Merrill merger, which made it the largest U.S. bank.
New York Attorney General Andrew Cuomo has threatened to sue bank officers, perhaps including Chief Executive Kenneth Lewis. Ohio Attorney General Richard Cordray plans on Monday to update the status of a shareholder class-action lawsuit against the bank.
Bank of America shares dropped 38 cents to $16.60 on the New York Stock Exchange on Friday. They traded at $33.74 before the Merrill purchase was announced on September 15, 2008.
The case is SEC v. Bank of America Corp, U.S. District Court, Southern District of New York (Manhattan), No. 09-6829.
(Reporting by Jonathan Stempel with additional reporting by Rachelle Younglai, editing by Gerald E. McCormick)
PITTSBURGH (Reuters) –
The Group of 20 rich and developing nations declared their crisis-fighting efforts a success on Friday and promised to give rising powers such as China more say in rebuilding and guiding the global economy.
Leaders pledged to keep emergency economic supports in place until sustainable recovery is assured, launch a framework for acting together to rebalance economic growth, and implement tougher rules governing banks by 2012 in a statement released at the end of a two-day meeting.
"Here in Pittsburgh, leaders representing two thirds of the planet's population have agreed to a global plan for jobs, growth and a sustained economic recovery," British Prime Minister Gordon Brown said.
U.S. President Barack Obama's first turn hosting a major summit ended on an upbeat note, with leaders claiming victory in stopping the recession from turning into a depression.
"It worked," they said in the final communique. "Our forceful response helped stop the dangerous, sharp decline in global activity and stabilize financial markets."
Obama said, "We cannot tolerate the same old boom-and-bust economy of the past. We can't wait for a crisis to cooperate. That's why our new framework will allow each of us to assess the other's policies, to build consensus on reform, and to ensure that global demand supports growth for all."
The Pittsburgh gathering was the third summit in a year for the G20, which said it would now be the "premier forum" for economic cooperation, supplanting the Western-dominated G7 and G8 that were the primary international forums for decades.
The move was a clear acknowledgment that fast-growing countries such as China and India now play a much more important part in world growth.
"This movement to the G20 and away from the G7 is recognizing economic realities. You can't talk about the global economy without having the major dynamic emerging economies at the table," John Lipsky, the deputy managing director of the International Monetary Fund, told Reuters Television.
Disclosure of a second Iranian uranium enrichment plant gave Obama, with the leaders of Britain and France at his side, an opportunity to press for united action against Tehran over its disputed nuclear program.
Obama said Iran was "on notice" that it will have to make a choice when it meets with world powers in Geneva on October 1 whether it would "continue down a path that is going to lead to confrontation".
JOB NOT DONE
Tough economic tasks remained for the group.
The G20 vowed not to return to the "reckless behavior" blamed for triggering the financial crisis, which exploded two years ago when failing U.S. mortgage loans caused catastrophic losses at financial firms around the world.
"A sense of normalcy should not lead to complacency," the G20 leaders said in the communique. "We want growth without cycles of boom and bust and markets that foster responsibility not recklessness."
In addition to the regulatory reforms, which are supposed to be developed by the end of 2010 and put in place two years later, the G20 took aim at lavish pay packages for bankers. The leaders agreed on a provision that would allow firms to claw back or reclaim pay and bonuses previously paid in certain instances. The measure was aimed at making sure bankers don't get huge payouts for making risky bets that later go bad.
The leaders also agreed to shift some voting power at the International Monetary Fund to underrepresented countries such as China from rich ones, another sign that the developed world had accepted the shifting balance of economic power.
In the statement, the G20 endorsed a plan to phase out fossil fuel subsidies as a way to combat global warming, and to step up efforts to complete the Doha round of trade talks.
World leaders also backed a U.S.-led push for reshaping the global economy to smooth out huge surpluses in exporting powerhouses such as China and large deficits in big importing countries such as the United States.
Obama wants the United States to break out of its borrow-and-spend mold and embrace saving and investment, but that means countries such as China that rely on exports for growth must also adjust.
G20 leaders agreed to work together to assess how their domestic policies mesh and to evaluate whether they are "collectively consistent with more sustainable and balanced growth."
Countries with sustained, significant surpluses -- a description that could fit China -- pledged to strengthen domestic sources of growth, according to the communique. By the same token, countries with big deficits -- such as the United States -- pledged to support private savings.
Economists have warned for years that these large imbalances could destabilize the global economy, and previous attempts to correct them have fallen flat.
The United States thinks the effort will succeed this time because China and other big exporters suffered severe slumps when global trade collapsed during the recession, which showed their economies were vulnerable to outside shocks.
Despite the show of solidarity, there were some sources of friction. Many Europeans were frustrated that little was agreed on how to pay for fighting climate change, particularly with a December climate summit in Copenhagen fast approaching.
"I do not hide my concern at the slow rate of progress. Negotiations cannot be an open ended process. It's time to get serious now, not later," European Commission President Jose Manuel Barroso said in a statement.
Kept at a distance from the G20 convention center, about 10,000 protesters marched against capitalism and the G20's agenda, some of them chanting "You're sexy, you're cute, take off that riot suit" to the police.
There was only one arrest on Friday and the mood was buoyant, in stark contrast to protests on Thursday when there were clashes with police and dozens of arrests.
(Reporting by Reuters G20 team; Additional reporting by Richard Leong in New York; Writing by Emily Kaiser; Editing by Frances Kerry)
NEW YORK (Reuters) –
Stocks fell for a third straight day on Friday on disappointing housing and durable goods data, while Research In Motion's lackluster results dented optimism about technology spending.
Economic reports showed that new orders for long-lasting U.S. manufactured goods fell by their biggest margin in seven months, while August sales of new home fell short of Wall Street's expectations, raising questions about the strength of the recovery.
With the benchmark S&P 500 having risen almost 60 percent from 12-year lows in early March, the tolerance threshold of less-than-stellar economic data has diminished as investors seek justification for the strong runup in stocks.
Economically sensitive stocks bore the brunt of the selloff, including technology, big manufacturers, banks, home builders and some consumer companies.
Shares of Research In Motion (
"The data on the health of the residential market and durable goods do not support a quick recovery thesis," said David Dietze, chief investment officer of Point View Financial Services in Summit, New Jersey.
"We need to see some data points that are leading us in the right direction."
The Dow Jones industrial average (.DJI) fell 42.25 points, or 0.44 percent, to 9,665.19. The Standard & Poor's 500 Index (.SPX) dropped 6.40 points, or 0.61 percent, to 1,044.38. The Nasdaq Composite Index (.IXIC) declined 16.69 points, or 0.79 percent, to 2,090.92.
A rise in shares of companies which fare better in an uncertain economy, including Coca-Cola Co (KO.N), helped indexes finish the session off their worst levels. Even so, the S&P 500 snapped a two-week winning streak and suffered its biggest weekly drop since early July.
For the week, the S&P 500 fell 2.2 percent, the Dow dropped 1.6 percent and the Nasdaq declined 2 percent.
Wal-Mart Stores Inc (WMT.N), off 2.4 percent to $49.47, was the Dow's worst drag, followed by United Technologies Corp (UTX.N), down 1.3 percent to $61.54.
Homebuilder KB Home (KBH.N) slumped 8.5 percent to $16.96 after reporting a wider-than-expected quarterly loss and its chief executive warned he does not expect meaningful improvement in the U.S. housing market in the near future.
The Dow Jones home construction index (.DJUSHB) declined 2.8 percent.
Shares of credit card company American Express Co (AXP.N) fell 2.3 percent to $33.07, while JPMorgan (JPM.N) declined 1.6 percent to $43.65. The S&P financial index (.GSPF) shed 1.1 percent.
Before this week's selling, stocks had rallied sharply for six months on expectations that the recovery was gaining traction.
But besides worrying about the recovery, the market also is nervous that authorities might curb stimulus measures too soon.
Volume was moderate, with about 1.20 billion shares changing hands on the New York Stock Exchange, compared with last year's estimated daily average of 1.49 billion. On the Nasdaq, about 2.39 billion shares traded, above last year's daily average of 2.28 billion.
Declining stocks outnumbered advancing ones by a ratio of about 6 to 5 on the NYSE, while on Nasdaq about 4 stocks fell for every 3 that rose.
(Editing by Kenneth Barry)