Corporate Governance

SEC v. BofA: Judge Rakoff Rejects the Settlement (Part 1)

By J. Robert Brown

In what has to be a stinging rebuke to both sides, Judge Rakoff refused to approve the settlement between the Securities and Exchange Commission and the Bank of America over the alleged failure to adequately disclose the Merrill Lynch bonuses paid just before the merger.  Bank of America had agreed to $33 million penalty; the SEC did not charge any of the lawyers or officers involved in the disclosure process.  

We criticized the settlement, questioning whether in fact the alleged misstatement was material.  Bank of America went further.  It contended that it had done nothing wrong, that it had made no misstatement of any kind.  We concluded based upon that position that the SEC should have to litigate the case rather than go through with the settlement.  Judge Rakoff apparently agrees.   We will discuss the basis for the rejection of the settlement in the next posts.

Full post as published by The Race to the Bottom on September 15, 2009 (boomark / email).