The BofA-SEC Settlement Gets a Grudging OK in Court
Merrill Lynch reported losses of $27.6 billion for 2008 and paid out $3.6 billion in bonuses shortly before the merger closed.
The New York Times reported that the judge called the $150 million settlement amount "paltry," but reluctantly conceded that it had met the minimum requirement for approval. "This court, while shaking its head, grants the SEC's motion and approves the proposed consent judgment," Rakoff wrote.
He had rejected the SEC's previous settlement offer of $33 million made last August, which resulted in the increase to $150 million. Had Rakoff rejected the revised settlement, it would have resulted in a March 1 trial.
"Despite the bank's somewhat coy refusal to concede the materiality of these nondisclosures, it seems obvious that a prudent bank shareholder would have thought twice about approving the merger or might have sought its renegotiation," the judge wrote.
BofA has denied any wrongdoing from the start, but many expect Judge Rakoff's decision to be used against it in future lawsuits. Shareholders are expected to file suits, and New York Attorney General Andrew Cuomo is currently suing the bank for fraud.