Oh That Independent Third Branch! Judge Rakoff Declines To Approve Bank Of America Settlement, At Least For Now
We reported the other day that Bank of America and the Securities and Exchange Commission had reached a settlement on SEC charges that Bank of America had misled investors about billions of dollars in bonuses that were being paid to Merrill Lynch & Co. executives at the time of its acquisition of the firm. Bank of America agreed to settle the SEC's charges and pay a penalty of $33 million (see http://www.financialfraudlaw.com/content/after-being-charged-sec-failing-disclose-merrill-lynch-bonus-payments-bank-america-agrees-pa).
Well, Southern District of New York Judge Jed Rakoff has refused to approve the deal, instead issuing an order stating, in part:
“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.
“Further, 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 ‘bail out.’”
Instead of going forward as the parties had expected, Judge Rakoff is holding a hearing next Monday afternoon to hear from the parties. That’s going to be interesting!
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