Why Does BofA Owe This Former Banker?

An investigation into client money transfers in 2006 — which led to the indictment of 18 bankers at Credit Suisse (NYSE:CS) and UBS (NYSE:UBS) — left former Brazilian Merrill Lynch banker Alexandre Caiado in jail for five days. His time in a federal prison in Curitiba was prompted by allegations that he helped Merrill’s customers make illegal overseas money transfers. But a problem arose when the junior financial consultant was not convicted of any wrongdoing, yet he was fired nine months later.

Now that Merrill Lynch has become a division of Bank of America (NYSE:BAC), the firm must compensate Caiado 150,000 reais — a sum roughly equivalent to $76,500 — because, according Sao Paulo’s 26th labor court, it was “incontrovertible” that the imprisonment was because of his position as a junior financial consultant at Merrill Lynch.

When Merrill fired him after the incident, the firm said that his dismissal was part of a restructuring, and the Bank of America executives who have inherited this controversy maintain that his arrest was not related to his work for Merrill Lynch.

Upon a request for an interview from Bloomberg, the financial institution declined to comment on the case…