Legal News

Rakoff on BofA, SEC Settlement: Not So Fast, Fellas

By Ashby Jones

Monday afternoon, we got word of a lawsuit between the SEC and Bank of America, followed quickly by word of a settlement. BofA agreed to pay a $33 million fine to settle a suit, in which the SEC had alleged that the bank failed to disclose to investors that it had agreed to pay $5 billion in bonuses at the time of its takeover of Merrill Lynch, last fall. Click here for the post.

But New York federal judge Jed Rakoff (pictured) has put the kibosh on the deal, at least for the time being, reports Reuters. (Update: Click here for the WSJ story.)

Reuters reports that in an an order on Wednesday, Rakoff said it might be unfair to the public to accept the settlement. "The proposed consent judgment would leave uncertain the truth of the very serious allegations made in the complaint," Judge Rakoff wrote in his two-page order.

Rakoff said the deal "in no way specifies the basis for the $33 million figure or whether any of this money is derived directly or indirectly from the $20 billion in public funds previously advanced to Bank of America as part of its 'bailout.' "

An S.E.C. spokesman, John Nester, declined to comment to Reuters. Bank of America did not immediately return requests for comment.

Full post as published by Law Blog - WSJ.com on August 06, 2009 (boomark / email).