The seven month legal saga which began in August, 2009 ended when Judge Jed S. Rakoff of the Southern District of New York, approved the previously rejected settlement between Bank of America and the Securities and Exchange Commission over its merger with Merrill Lynch.
Summing up what he thought of the controversial deal that caused a second government bailout of 20 billion dollars, Judge Rakoff wrote, “This is a merger that may yet turn out well, but that could have been a bank-destroying disaster if the U.S. taxpayer had not saved the day.”
In trying to avoid an upcoming trial date set by Rakoff, the S.E.C. negotiated an increase in fine and penalties to 150 million dollars from the orginal 33 million dollar agreement rejected in August. Facing civil lawsuits from shareholders, Bank of America continued to argue it’s disclosures were adequate, a position Judge rakoff found difficult to accept.
Referring to the failure to disclosure Merrill’s hefty bonus payouts or the mounting losses that eventually led to a second government bailout of $20 billion, “It seems obvious that a prudent bank shareholder,” the judge wrote, “would have thought twice about approving the merger or might have sought its renegotiation.”
To what extent, if any, Bank of America’s executives knew and intentionally failed to disclose pertinent information to shareholders may become more clear when it faces a complaint filed earlier this year by the State of New York.
See the original article here Judge Accepts S.E.C. v. BofA Deal
