A $33 million settlement between the Bank of America and the Securities and Exchange Commission over bonuses paid to Merrill Lynch executives was rejected Monday morning by a Federal District judge. The bonuses were paid right before Bank of America took over Merrill Lynch last year.
Federal Court judge Jed S. Rakof noted that the settlement "does not comport with the most elementary notions of justice and morality". At this time, the S.E.C. will have to either hammer out a settlement or go back to court. There is also the option for the S.E.C. to drop the case.
Shortly before the merger between Bank of America and Merrill Lynch at the end of 2008, $3.6 billion in bonuses were paid out by Merrill Lynch. None of the shareholders were involved in this decision even though the merger was approved on December 5, 2008. This was very close to the time of the bonus payouts.
The case fines would be paid by the bank’s shareholders if had been settled. This led Judge Rakof to question the case's validity as the shareholders were considered to be the injured party due to lack of disclosure about the bonus payouts.
There are several other investigations going on concerning the bank’s deal with Merrill Lynch. Among them is an investigation by Andrew M. Cuomo, the attorney general of New York. He is investigating the bank's disclosure of bonuses as well as Merrill's losses late in 2008.
Thursday, 17 September 2009
Merrill Lynch Bonuses Rejected by Judge
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