Judge Jed S. Rakoff, a United States District Court judge in Manhattan, wants to hold individual executives responsible for the $3.6 billion of bonuses paid and kept secret from shareholders during the merger of Merrill Lynch with Bank of America. Rakoff is the first judge to demand recipient names, according to The New York Times. Rakoff is also questioning the fairness of the SEC’s $33 million fine because it was paid by shareholders who were unaware of the bonuses. The judge also noted that BofA’s second bailout essentially paid for the firm’s executive bonuses. Previously, Judge Rakoff ruled in the WorldCom case, raising the fine from the SEC’s recommended $500 million to $700 million, and demanded that amount be paid out to shareholders. “I could have put the company out of business,” he acknowledged. “But it seemed to me that would have been 60,000 jobs needlessly lost.” He also oversaw the review of the company’s corporate governance practices. “The SEC has to have noticed by now that most of the country agrees with the sentiments expressed by Rakoff,” said John C. Coffee, a Columbia Law School professor who has taught a course along with Judge Rakoff for 21 years. “This builds up pressure on Bank of America and the SEC.”
Merrill and BofA Face Pressure on $3.6 Billion Bonuses
Judge Jed S. Rakoff thinks shareholders have been punished enough, and executives should be held more accountable.
August 24, 2009