Judge Blocks $33 Million Bank of America Settlement
Let me guess, Timmy thinks this is why we need one regulator who can simply wave his magic regulatory wand and make messes like this disappear?
Sorry Bank of America, looks like it's going to be two pounds of flesh...
A federal judge has refused to approve a settlement between the Securities and Exchange Commission and Bank of America related to the acquisition of Merrill Lynch.
In an order on Wednesday, Judge Jed Rakoff of the Federal District Court in Manhattan said it might be unfair to the public to accept the settlement, which would resolve S.E.C. allegations that Bank of America made false and misleading statements to shareholders about bonuses promised to Merrill employees.
Bank of America reached an agreement with the S.E.C. on Monday to pay $33 million to settle the case. Judge Rakoff set a hearing on the matter for next Monday.
In its complaint, the S.E.C. said that Bank of America told investors in proxy documents that Merrill had agreed it would not award year-end performance bonuses or incentive pay before the merger closed.
The agency said in its suit that Bank of America had already authorized Merrill to pay up to $5.8 billion of bonuses. Merrill would ultimately pay $3.6 billion, according to regulators.
The merger closed on Jan. 1. Two weeks later, Bank of America accepted $20 billion from the Troubled Asset Relief Program to help it absorb Merrill.
“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.
He also 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.’ ”
Bank of America is (rightfully so) in the nut vice but not because of some taxpayer vendetta (could you even imagine TPTB saying "you know what? America had your back and you continue to dick them around so we're going to fix that!") but because BofA obviously crossed the wrong folks.
I won't name names, that'd be tacky, but this might refresh your memory a tad.