Judge Negs Bank of America’s Settlement With SEC Over Bonuses

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Photo: NYT

Jed S. Rakoff has got to be fed up with the morally bankrupt society in which we live. Last month, he sentenced Ponzi schemer Marc Dreier to twenty years. Last year, he presided over matters regarding Eliot Spitzer's Hookergate, and before that, the SEC suit against WorldCom. And yesterday, in one of the few true acts of genuine heroism of the financial crisis thus far, the judge smacked down the sweet deal Bank of America thought they'd made with the SEC, wherein they agreed to pay $33 million in order to make the regulator's complaint that they had lied to shareholders about paying $3.6 billion in bonuses to Merrill Lynch employees upon the company's acquisition by Bank of America go away.


The judge characterized the $33 million fine as “strangely askew” given the accusations made, the magnitude of Merrill’s losses and the subsequent bailout for Bank of America. The judge questioned the role of top executives at the companies, in particular [CEO Ken] Lewis and John A. Thain, the former chief executive of Merrill Lynch, both of whom signed off on a proxy statement to investors.

“Was there some sort of ghost that performed those actions?” Judge Rakoff said.

He also wasn't having it when Bank of America claimed that the money used to pay the bonuses was different from the federal bailout money.

“Money is money, the last time I checked,” Judge Rakoff responded.


There may be some justice in the world, after all.

Judge Attacks Merrill Pre-Merger Bonuses [NYT]