Judge Rejects Settlement Over Merrill Bonuses
A Federal District judge on Monday overturned a settlement between the Bank of America and the Securities and Exchange Commission over bonuses paid to Merrill Lynch executives just before the bank took over Merrill last year.
The $33 million settlement “does not comport with the most elementary notions of justice and morality,” wrote Jed S. Rakoff, the judge assigned to the case in federal court in Lower Manhattan, The New York Times’s Louise Story writes. (Read the decision after the jump.)
The ruling forces the commission to go back to the drawing board in its case against the bank, which focused on $3.6 billion bonuses paid out by Merrill Lynch late last year, just before that firm was taken over by Bank of America. Neither company provided details of the bonuses to their shareholders, who voted on Dec. 5 to approve the merger.
The judge focused much of his criticism on the fact that the fine in the case would be paid by the bank’s shareholders, those supposed to have been injured by the lack of disclosure around the bonuses.
“It is quite something else for the very management that is accused of having lied to its shareholders to determine how much of those victims’ money should be used to make the case against the management go away,” the judge wrote.
Bank of America has argued in its filings with the judge that it did nothing wrong in its disclosures.The case before Judge Rakoff is just one of several investigations into the bank’s deal with Merrill. Andrew M. Cuomo, the attorney general of New York, is also investigating the bank’s disclosures of bonuses and of Merrill’s surprise losses late last year. The House Committee on Government Oversight and Reform is also looking into the merger.
Judge’s Rejection of S.E.C.-Bank of America Settlement
Judge's Rejection of S.E.C.-Bank of America Settlement