The Merrill Lynch deal probably sounded good at the time. But Bank of America (NYSE:BAC) is still taking it on the chin from this ill-conceived idea. First, their stock plummeted. Then, their CEO was essentially forced out. Now, the company and some top execs will be facing charges from the Securities and Exchange Commission.

While no formal charges have been filed as of yet, SEC Enforcement Director Robert Khuzami stated that the agency would “vigorously pursue (its) charges against Bank of America and…prove (its) case in court”. The SEC claims that BofA held back from disclosing Merrill Lynch’s true financial position and its record bonus payments to shareholders, who then approved the merger. The SEC also charges that CEO Ken Lewis held back from telling investors that then-Treasury Secretary Hank Paulson and Fed Chief Ben Bernanke had pressured him into closing the Merrill deal.

For the SEC, which is still licking its wounds from Madoff-gate, this is a golden opportunity to reassert its regulatory control over a financial sector that has been free-wheeling for twenty years. For Bank of America, it’s another setback for a company that was just beginning to reclaim its financial footing. No successor for outgoing CEO Lewis has been named, but the next person who takes the top job at BofA would do well to be a little more transparent.