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Tuesday, September 15, 2009
News / Biz Federal judge: BofA settlement unfair to shareholders
Posted By Rhiannon Fionn-Bowman on Tue, Sep 15, 2009 at 12:57 PM
Too bad it takes a federal judge to step up on behalf of shareholders.
Calling Bank of America's proposed settlement with the SEC a "facade of enforcement," U.S. District Judge Jed Rankoff told both parties to get ready for a February trial.
A federal judge on Monday rejected Bank of America's $33 million proposed settlement with the Securities and Exchange Commission over allegations it misled shareholders about Merrill Lynch bonuses. The rebuke came amid reports that top bank executives could soon face charges from New York's attorney general over similar accusations.In his order, U.S. District Judge Jed Rakoff in Manhattan attacked the settlement reached last month as unfair and unreasonable, and told the two parties to prepare for a Feb. 1 trial date. The ruling prevents the bank from closing one aspect of a multilevel investigation of the 2008 Merrill acquisition and promises to dredge up more bad publicity for Bank of America and chief executive Ken Lewis.
The judge said the settlement unfairly left shareholders footing the bill. The agreement “was a contrivance designed to provide the SEC with the facade of enforcement and the management of Bank of America with a quick resolution of an embarrassing inquiry – all at the expense of the sole alleged victims, the shareholders,” Rakoff wrote.
Here's WCNC's broadcast from last month, explaining why BofA proposed a settlement in the first place:
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