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Judge Rejects Merrill Bonus Settlement, Quotes Oscar Wilde
By
Jen Chung
Published Sep 14, 2009
Modified Sep 14, 2009
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By
Jen Chung
Published Sep 14, 2009
Modified Sep 14, 2009
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Federal Judge Jed S. Rakoff rejected the $33 million settlement that the Securities and Exchange Commission accepted from Bank of America over the $3.6 billion in bonuses paid to Merrill Lynch employees. BoA, which acquired Merrill, knew Merill was about to post $9 billion in fourth quarter losses yet went ahead with the bonuses; Rakoff found that BoA "materially lied" to shareholders about the losses.
Rakoff was also unhappy that the $33 million settlement would essentially be paid by the victims—the BoA shareholders—and wrote, "It does not comport with the most elementary notions of justice and morality, in that it proposes that the shareholders who were the victims of the bank's alleged misconduct now pay the penalty for that misconduct." And from the NY Times:
The judge also criticized the S.E.C., which has been trying to step up the profile of its investigations unit. The judge quoted Oscar Wilde’s “Lady Windermere’s Fan” in the end of his ruling to say that a cynic is someone “who knows the price of everything and the value of nothing.”
The proposed settlement, the judge continued, “suggests a rather cynical relationship between the parties: the S.E.C. gets to claim that it is exposing wrongdoing on the part of the Bank of America in a high-profile merger; the bank’s management gets to claim that they have been coerced into an onerous settlement by overzealous regulators. And all this is done at the expense, not only of the shareholders, but also of the truth.”
Four years ago, Rakoff invoked Hamlet and Oedipus Rex when allowing Marc Ecko to have a graffiti party.
Now that the settlement's been nixed, a possible trial between the SEC and BoA may begin next February.
Tagged
Bank of America
bonus
FAIR
jed rakoff
Judge Rakoff
Merrill Lynch
oscar wilde
wall street
Jen Chung
Jen Chung is a former WNYC and Gothamist editor.
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Gothamist is funded by sponsors and member donations
Gothamist is funded by sponsors and member donations
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