Judge raps $33m bank bonus fine

A man uses a cashpoint at a Bank of America branch in Pasadena, California. Photo: July 2009

Bank of America is among the largest recipients of US government aid

A US judge has refused to approve a $33m (£19m) fine that Bank of America agreed to pay to settle charges that it misled investors about bonuses.

Bank of America saved Merrill Lynch from collapse after telling its shareholders no bonuses would be paid to executives without their approval.

The Securities and Exchange Commission(SEC) alleged that the bank authorised Merrill to pay up to $5.8bn in bonuses.

The bank has neither admitted nor denied the SEC allegations.

"Despite the public importance of this case, the proposed consent judgment would leave uncertain the truth of the very serious allegations made in the complaint," Judge Jed Rakoff wrote in the complaint.

"The proposed consent judgement in no way specifies the basis for the $33m figure or whether any of this money is derived directly or indirectly from the $20bn in public funds previously advanced to Bank of America as part of its 'bailout'," he said.

Bank of America was bailed out by the US taxpayer in 2008. It needed capital injections from the bail-out fund during the height of the financial crisis.

The SEC said Merrill ended up paying £3.6bn in bonuses in 2008, even though it incurred heavy losses that year.

Goldman revenues

Controversy continues to rage about profits and bonuses at bailed-out banks.

It emerged late on Wednesday that Goldman Sachs made more than $100m in revenues each day for 46 days in the second quarter.

Trading losses were reported on only two days during that quarter, the bank said.

Last month, the bank reported net earnings of $3.4bn, soon after repaying a $10bn bailout to the US government.