Merry or Merrill-y Go Round? SEC and BofA Settle, Again.
The Securities Lawyer Blog has followed the Bank of America's troubled settlement with the SEC in its acquisition of Merrill Lynch. The matter is finally moving towards resolution. Maybe.
Last week, the Am Law Daily Blog reported that BofA has settled with the SEC. Again.
Both the SEC and BofA are hopeful that this time Judge Rakoff will approve the settlement.
As previously reported, the original settlement of $33 million in fines was dismissed by Judge Rakoff as "trivial" for BofA's alleged failure to notify shareholders prior to its acquisition of Merrill Lynch that it planned to pay billions of dollars in employee bonuses. The Judge was not pleased that ultimately the shareholders would bear the burden of the fines.
The new settlement proposal carries substantially more in fines and includes specific oversight provisions and apparently a distribution plan that might please the judge.
According to the SEC, the new settlement deal includes a payment by the bank of $150 million in fines and will strengthen its corporate governance and disclosure practices. In this deal, the SEC requires the bank implement specific remedial measures over three years. These include, but are not limited to:
-- An independent auditor to audit internal disclosure controls;
-- Requires the CEO and CFO to certify a review of annual and merger proxy statements;
-- Retain disclosure counsel to report to the Board's Audit Committee;
-- Adopt a "super-independence" standard for the Compensation Committee prohibiting acceptance of other compensation from the bank;
-- Maintain a Consultation Committee consultant that would meet super-independence criteria; and,
-- Prominent publication on the bank's website of incentive compensation principles.
The bank has also agreed to turn over some formerly privileged documents between the bank and its counsel. The larger issue of privilege waiver - based on an alleged drafting error -- is still being litigated in separate shareholder cases.
Troubles remain as New York Attorney General Andrew Cuomo announced last week that his office has filed a civil suit against BofA and three former BofA executives. The suit charges BofA with disclosure violations in the Merrill acquisition.