Thank goodness someone has some sense. Manhattan Federal District Court Judge Jed Rakoff refused to approve Monday’s Bank of America’s deal with the SEC be cause it may be unfair to the public to accept the settlement.
Bank of America was accused by the SEC of lying to shareholders about its role in bonuses at Merrill Lynch. Yet, inexplicably, the SEC decide to settle the case for $33 million, allowing Bank of America to release a statement saying it had not admitted any wrong doing.
Bank of America believes that the settlement, which it entered into without admitting or denying the SEC’s allegations, represents a constructive conclusion to this issue.
This deal is a travesty and has now been stopped.
"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 in his two-page order.
"The proposed consent judgment in no way specifies the basis for the $33 million figure or whether any of this money is derived directly or indirectly from the $20 billion in public funds previously advanced to Bank of America as part of its ‘bailout,’" the judge added.
SEC spokesman John Nester declined immediate comment. Bank of America did not immediately return requests for comment.
The Wall Street Journal, citing company emails and people familiar with the situation, added that the Charlotte, North Carolina bank’s loss projections for Merrill bulged by nearly $2 billion two days before the takeover was approved by shareholders.
The bank’s executives, however, decided that the losses were not severe enough to be disclosed publicly before the vote, the paper said.
Good thing we have Judge Rakoff on our side because the SEC has not done right by taxpayers supporting Bank of America with tens of billions or by Bank of America shareholders who have lost considerable sums due to the events associated with the credit crisis.