As reported by CNN early on August 6, 2009, a U.S. federal judge rejected the pending settlement between Bank of America and the Securities and Exchange Commission. The SEC had alleged that the bank defrauded its shareholders by claiming that it would not pay bonuses to Merrill Lunch employees after the two companies merged earlier this year when, in fact, it had approved Merrill’s payment of $5.8 billion in bonuses. Ultimately, the bank paid $3.8 billion in bonuses to Merrill employees. Misleading shareholders is a particularly serious charge against the bank, especially since it later had to accept public funding to help it absorb Merrill. Bank of America had accepted $20 billion from the federal Troubled Asset Relief Program (TARP).
Federal Judge Jed Rakoff of the Southern District of New York court in Manhattan protected both Bank of America shareholders and the American public in his order on August 5. Bank of America had originally settled with the SEC for a fine of $33 million, but would not admit nor deny the fraud charges against it. The public has a right to know the truth behind these allegations. As Rakoff said in his order, “Despite the public importance of this case, the proposed consent judgment would leave uncertain the truth of the very serious allegations made in the complaint.” It remains unclear whether any of the money to be used to pay the fine was derived from the $20 billion in public funding. Judge Rakoff scheduled a hearing for August 10.
Page Perry is an Atlanta-based law firm with over 125 years collective experience representing investors in securities-related litigation and arbitration. While past results are not indicative of future success, Page Perry’s attorneys have recovered over $1,000,000 for clients on more than 30 occasions.