Block on Trump's Asylum Ban Upheld by Supreme Court
U.S. District Court Judge Jed Rakoff clearly wasn't thrilled at the Bank of America settlement with the Securities and Exchange Commission, calling it "half-baked justice, at best."
Nevertheless, Judge Rakoff reluctantly approved the settlement of $150 million between Bank of America and the SEC, after a lengthy battle by BofA to fight the civil charges of misleading shareholders during Bank of America's acquisition of Merrill Lynch.
But why doesn't Judge Rakoff like this settlement? It's certainly a step up from last year's proposed settlement of $33 million, which the Judge rejected.
According to Judge Rakoff, the biggest problem with the settlement is that it isn't punitive enough. Said Judge Rakoff:
"[I]t advocates very modest punitive, compensatory and remedial measures that are neither directed at the specific individuals responsible for the nondisclosures nor appear likely to have more than a very modest impact on corporate practices or victim compensation."
The victims he speaks of were the Bank of America shareholders, to whom the Bank failed to disclose the fact that it had authorized Merrill Lynch to pay hefty bonuses -- as much as $5.8 billion -- to its employees in 2008. These bonuses were notwithstanding the fact that Merrill Lynch lost $27.6 billion in 2008.
Essentially, the SEC complaint alleged a violation of Section 14(a) of the Exchange Act, which calls for adequate disclosure upon proxy solicitation. By not disclosing to shareholders that the bonuses to Merrill Lynch employees had been authorized, Bank of America allegedly committed fraud on its shareholders. Furthermore, in a separate case, BofA failed to disclose the nature of Merrill Lynch's losses to the shareholders.
Unfortunately, for Judge Rakoff, the law requires that he must give substantial deference to decisions and opinion of the SEC, otherwise he could have rejected the settlement outright.
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