Judge Jed S. Rakoff has refused to sign off on a consent decree between the Securities and Exchange Commission and Bank of America, saying unless there is a hearing, the public will not know details of the Wall Street bailout. He has set a hearing for Monday over the charges, in which the SEC alleged that the bank misled shareholders about billions of dollars in bonuses promised to Merrill Lynch employees when the bank bought Merrill at the height of the financial crisis last year, said the Wall Street Journal. The SEC and Bank of America had sought the judge’s approval for the settlement, in which Bank of America agreed to pay $33 million to end the civil lawsuit. The SEC complaint found fault with proxy documents that Bank of America and Merrill sent to their respective shareholders in November 2008 to vote on the $50 billion takeover. The SEC said the documents show Merrill wouldn’t pay year-end bonuses or other compensation before the deal closed without Bank of America’s consent. According to the complaint, the bank had already agreed that Merrill could pay such bonuses up to $5.8 billion. Judge Rakoff wrote: “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.”
Judge Demands Hearing in SEC Case Against BofA
The SEC complaint found fault with proxy documents that Bank of America and Merrill sent to their respective shareholders in November.
August 6, 2009