New SEC-Bank of America settlement proposal faulted
National News
A federal judge who rejected the government's first bid to settle civil charges against Bank of America Corp. showed little enthusiasm Monday for a new proposed settlement.
U.S. District Judge Jed Rakoff sharply questioned the merits of the latest proposal, which calls for the company to pay $150 million to resolve allegations that it lied to shareholders at the height of the financial crisis about its pending acquisition of brokerage Merrill Lynch.
Last fall, Rakoff threw out an initial, $33-million settlement between the company and the Securities and Exchange Commission, calling it a "contrivance designed to provide the SEC with the facade of enforcement."
At a hearing Monday on whether he should approve the new proposed deal, Rakoff asked whether the SEC had been forceful enough in the case. He noted the latest proposal, like the first one, would not punish individual Bank of America executives.
The judge referred repeatedly to a lawsuit filed last week in state court by New York Atty. Gen. Andrew Cuomo that deals with much of the same conduct.
Cuomo's case goes further than the SEC's in seeking to punish Bank of America's former chief executive, Ken Lewis, along with another executive as well as the bank itself. Although Rakoff poked fun at the angry rhetoric in Cuomo's complaint, the judge said it put forth "a great many allegations that seem far more suggestive of potential fraud than anything presented by the SEC."
"Weren't you operating from the same evidence?" Rakoff asked the SEC's lawyer.
The SEC initially accused Bank of America of lying to shareholders about its plan to pay billions of dollars in bonuses to Merrill Lynch employees after its acquisition of the brokerage was completed. More recently, the SEC also alleged that the Charlotte, N.C., banking giant did not disclose the size of Merrill's losses before a shareholder vote on the acquisition.
Cuomo last week said that his new case was working in concert with the SEC, which announced its settlement minutes before Cuomo announced his lawsuit. But rifts between Cuomo and the SEC were clear Monday, particularly regarding Cuomo's allegation that Bank of America fired a lawyer because he questioned the withholding of information from shareholders.
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What Is Meant by ‘No-Fault’ Workers’ Compensation in Illinois?
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