Post by unlawflcombatnt on Sept 14, 2009 13:18:37 GMT -6
A Federal judge has finally rejected the spineless SEC's wrist-slap of Bank of America for non-disclosure of bonuses in the Merrill-Lynch deal. The judge rejected BofA's minuscule $33 million settlement amount as not being even close to "fair." Bank of America must now stand trial over the issue,
starting February 1.
from Yahoo/AP:
Judge rejects deal between SEC, BofA over bonuses
By STEPHEN BERNARD,
Monday, Sept. 14, 2009
"A federal judge on Monday rejected a $33 million settlement between the Securities and Exchange Commission and Bank of America Corp., saying the SEC's accusations of inadequate disclosure by the bank over bonuses paid at Merrill Lynch must now go to trial.
The ruling comes 1 month after the agency and Bank of America thought they had put a thorny issue behind them, and leaves the SEC with the task of mounting a case against BofA over one of the most sensitive issues of the financial crisis — executive pay on Wall Street.
The SEC announced last month that it had settled its civil charges against BofA, which agreed to buy the New York investment bank last year, without the bank admitting or denying guilt in the case. BofA has said it didn't violate disclosure rules.
U.S. District Judge Jed Rakoff held up his approval of the settlement, however, and ordered the SEC last month to explain why it didn't pursue charges against specific executives at Bank of America over the accusations.
After receiving additional statements from the SEC and BofA last week, Rakoff ruled Monday that the proposed $33 million settlement "cannot remotely be called fair," and ordered that the case go to trial beginning Feb. 1.
Bank of America agreed to acquire Merrill Lynch in a hurried deal exactly 1 year ago today, just as Lehman Brothers was preparing to file for bankruptcy. It was later revealed that Merrill, with the knowledge of Bank of America executives, accelerated $3.6 billion in bonus payments before the deal closed on Jan. 1.
Merrill wound up paying the bonuses for 2008 despite losing $27.6 billion that year, a record for the firm. Those losses affected the bottom line at Bank of America, one of the largest recipients of U.S. government bailout funds.
Rakoff, in his ruling, found that the proposed settlement "suggests a rather cynical relationship between the parties: the SEC gets to claim that it is exposing wrongdoing on the part of the Bank of America in a high-profile merger, the bank's management gets to claim that they have been coerced into an onerous settlement by overzealous regulators. And all this is done at the expense, not only of the shareholders, but also of the truth."....
In seeking approval to buy Merrill Lynch, Bank of America told investors that Merrill would not pay year-end bonuses without Bank of America's consent. But in its complaint filed Aug. 3 in federal court in Manhattan, the SEC said Bank of America had already authorized Merrill to pay up to $5.8 billion in bonuses and didn't share that information with shareholders.
That rendered a statement Bank of America mailed to 283,000 shareholders of both companies about the Merrill deal "materially false and misleading," the SEC said.
Rakoff's rejection of the settlement comes on the same day Bank of America was facing a deadline to turn over additional details about the Merrill acquisition to the New York Attorney General, who is conducting a separate investigation into the merger.
Both Rakoff and New York Attorney General Andrew Cuomo's office have questioned whether the bank knowingly hid details about the acquisition from shareholders ahead of a vote to approve the deal.
Bank of America, among the banks hardest hit by mounting loan losses and the recession, is one of the largest recipients of aid under the government's financial bailout program. It has received $45 billion, including $20 billion in January, and guarantees to protect it against losses on hundreds of billions of dollars in loans to help it absorb mounting losses at Merrill."
news.yahoo.com/s/ap/20090914/ap_on_bi_ge/us_bank_of_america_sec
starting February 1.
from Yahoo/AP:
Judge rejects deal between SEC, BofA over bonuses
By STEPHEN BERNARD,
Monday, Sept. 14, 2009
"A federal judge on Monday rejected a $33 million settlement between the Securities and Exchange Commission and Bank of America Corp., saying the SEC's accusations of inadequate disclosure by the bank over bonuses paid at Merrill Lynch must now go to trial.
The ruling comes 1 month after the agency and Bank of America thought they had put a thorny issue behind them, and leaves the SEC with the task of mounting a case against BofA over one of the most sensitive issues of the financial crisis — executive pay on Wall Street.
The SEC announced last month that it had settled its civil charges against BofA, which agreed to buy the New York investment bank last year, without the bank admitting or denying guilt in the case. BofA has said it didn't violate disclosure rules.
U.S. District Judge Jed Rakoff held up his approval of the settlement, however, and ordered the SEC last month to explain why it didn't pursue charges against specific executives at Bank of America over the accusations.
After receiving additional statements from the SEC and BofA last week, Rakoff ruled Monday that the proposed $33 million settlement "cannot remotely be called fair," and ordered that the case go to trial beginning Feb. 1.
Bank of America agreed to acquire Merrill Lynch in a hurried deal exactly 1 year ago today, just as Lehman Brothers was preparing to file for bankruptcy. It was later revealed that Merrill, with the knowledge of Bank of America executives, accelerated $3.6 billion in bonus payments before the deal closed on Jan. 1.
Merrill wound up paying the bonuses for 2008 despite losing $27.6 billion that year, a record for the firm. Those losses affected the bottom line at Bank of America, one of the largest recipients of U.S. government bailout funds.
Rakoff, in his ruling, found that the proposed settlement "suggests a rather cynical relationship between the parties: the SEC gets to claim that it is exposing wrongdoing on the part of the Bank of America in a high-profile merger, the bank's management gets to claim that they have been coerced into an onerous settlement by overzealous regulators. And all this is done at the expense, not only of the shareholders, but also of the truth."....
In seeking approval to buy Merrill Lynch, Bank of America told investors that Merrill would not pay year-end bonuses without Bank of America's consent. But in its complaint filed Aug. 3 in federal court in Manhattan, the SEC said Bank of America had already authorized Merrill to pay up to $5.8 billion in bonuses and didn't share that information with shareholders.
That rendered a statement Bank of America mailed to 283,000 shareholders of both companies about the Merrill deal "materially false and misleading," the SEC said.
Rakoff's rejection of the settlement comes on the same day Bank of America was facing a deadline to turn over additional details about the Merrill acquisition to the New York Attorney General, who is conducting a separate investigation into the merger.
Both Rakoff and New York Attorney General Andrew Cuomo's office have questioned whether the bank knowingly hid details about the acquisition from shareholders ahead of a vote to approve the deal.
Bank of America, among the banks hardest hit by mounting loan losses and the recession, is one of the largest recipients of aid under the government's financial bailout program. It has received $45 billion, including $20 billion in January, and guarantees to protect it against losses on hundreds of billions of dollars in loans to help it absorb mounting losses at Merrill."
news.yahoo.com/s/ap/20090914/ap_on_bi_ge/us_bank_of_america_sec