A federal judge, Jed Rakoff, has said he needs more information on the basis for Bank of America’s $33 million settlement of a lawsuit filed by the Securities and Exchange Commission before he can approve it. Bank of America on Aug. 3 agreed to resolve claims it misled investors about bonus payments in connection with its January acquisition of Merrill Lynch. The SEC had filed a complaint shortly before the accord was announced. Bloomberg reported the agreement didn’t specify how the $33 million figure was arrived at or whether it would come from the $20 billion Bank of America received in bailout money from the federal government, U.S. District Judge Rakoff said.“Despite the public importance of this case, the proposed consent judgment would leave uncertain the truth of the very serious allegations made in the complaint,” Rakoff wrote. The SEC claimed in its complaint that Bank of America falsely represented to shareholders of both banks “that Merrill had agreed not to pay year-end bonuses when, in fact, Bank of America had agreed that Merrill could pay such bonuses up to as much as $5.8 billion,” Rakoff wrote. Merrill paid $3.8 billion in bonuses, according to the order. Both Bank of America and SEC spokesmen said they looked forward to answering the judge’s questions.
Federal Judge Requests More Data on BofA’s SEC Settlement
Court asks for details on how the penalty was arrived at and how the settlement will be paid.
August 7, 2009