It's a No-Go for BofA Settlement with SEC

September 14, 2009 (PLANSPONSOR.com) - U.S. District Judge Jed Rakoff rejected a settlement between the Securities and Exchange Commission (SEC) and Bank of America (BofA) over bonuses paid by Merrill Lynch, the Associated Press reported.

Rakoff said the parties should be prepared for a possible trial beginning no later than February 1. After twice asking BofA and the SEC to come up with more information, Rakoff is still not content with the proposed settlement.

He wrote in his opinion that the $33-million settlement was a “trivial penalty for a false statement that materially infected a multi-billion-dollar merger,” according to the AP. The settlement “does not comport with the most elementary notions of justice and morality,” Rakoff complained.

The ruling forces the SEC to either rework the settlement or take the case to trial. Regulators could also drop the case entirely.

BofA is under scrutiny for $3.6 billion in bonuses paid to Merrill executives before the bank’s acquisition of Merrill Lynch. Neither company provided details of the bonuses to their shareholders, who voted on December 5 to approve the merger.

Last month the bank agreed to pay $33 million to settle SEC charges that BofA misled investors by authorizing the bonus payments.


The bank also faced a Monday deadline to provide more details about the bonuses to New York Attorney General Andrew Cuomo.

–Ellie Behling

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