Judge rules against BoA & SEC deal
A US federal judge yesterday rejected a $33m (£19.9m) settlement reached by the Securities and Exchange Commission (SEC) and Bank of America (BoA) over accusations that the bank misled shareholders over millions of dollars of bonuses.
In the third rejection of the deal by American courts, USDistrict Judge Jed Rakoff said the agreement could not “remotely be called fair” and ordered the SECand BoA to prepare for trial by 1 February.
The judge added he had a “distinct impression” that the settlement was “a contrivance designed to provide the SEC with the facade of enforcement and the management of BoA with a quick resolution of an embarrassing inquiry — all at the expense of the sole alleged victims, the shareholders”.
The settlement was meant to resolve SEC charges that BoA misled shareholders about having authorised the bonuses by not mentioning them in statements relating to the merger.
Rakoff’s decision came as BoA and its chief executive Kenneth Lewis faced a deadline last night from New York Attorney General Andrew Cuomo to provide more details about the bank’s purchase of Merrill.
BoA agreed to buy Merrill after less than 48 hours of talks on the same weekend that Lehman was collapsing last September. BoA has received $45bn of federal bailout money, including $20bn to help absorb Merrill.