Unless you've been on a secluded island this past week, it's likely you are aware that Judge Jed Rakoff rejected Bank of America's $33 million settlement with the Securities and Exchange Commission (SEC) over Merrill Lynch bonuses.
Even those who are not "street wise" are talking about the case. Perhaps because the Judge took it upon himself to attempt to embrace the larger issues and to do so with, shall we say, very strong language.
As noted recently in the Securities Lawyer Blog, the proposed settlement was at risk after the Judge requested more briefing. The Judge was interested in understanding why the agency had not sued individual executives, among other things. He seemed to be headed in this direction and now the case will go to trial. But the parties likely were holding out hope that the deal they had struck would put the issue to rest.
Now the public will likely see the agency go to trial against BofA on the issue of executive bonuses. A subject that seems to fire everyone up -- from Main Street to Wall Street.
The Judge had some unusually caustic words for the parties in this case, finding that the 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."
Ouch.
In an interview with the Huffington Post after the Judge's ruling, James Cox, a Duke University law professor and securities law expert said that he had " 'never seen this' " adding that to him, " 'it's long overdue.' "
New York Attorney General Cuomo also continues to be interested in whether shareholders were kept in the dark about the facts so that they would be more likely to approve the merger proposal.
