MORE ON Bank Of America/SEC Settlement: B of A Files Memorandum In Support Of Proposed Settlement
The Bank of America submitted a memorandum to federal district court today arguing that the proposed $33 million settlement of charges brought against it by the Securities and Exchange Commission should be approved, and that “had this matter been litigated, Bank of America would have been able to present powerful and successful defenses on the merits.” The SEC’s action – and Judge Jed Rakoff’s reluctance to approve the settlement – keeps the issue of bonuses and Wall Street compensation in the news.
The memorandum, submitted by Lewis J. Liman and Shawn J. Chen of the Cleary Gottlieb law firm pursuant to the district court’s August 10 direction, presents a powerful, and lawyerly, case in support of the settlement. Bank of America’s arguments are as follows:
- There was no false or misleading statement or omission in the proxy statement, which “accurately described the terms of the pertinent forbearance or ‘negative covenant’” in the merger agreement.
- The intention of Merrill Lynch to pay incentive compensation for 2008 was disclosed and was part of the “total mix” of information available to shareholders.
- It was “widely understood from Merrill Lynch’s public disclosures that Merrill Lynch intended to pay multi-billions of dollars in year-end incentive compensation.”
- The proposed settlement, including the $33 million civil penalty, represents “a constructive conclusion to this matter.”
Note that the phrase "multi-billions of dollars in year-end incentive compensation" is a correct quotation from the memorandum.
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