Manhattan U.S. District Court federal judge refuses $33 million settlement agreement between SEC and Bank of America attorneys ending executive bonus lawsuit. Government lawyers revealed Judge Rakoff refused to accept the $33 million settlement claiming the ruling would be unfair to tax payers.
Government lawyers in New York for the Securities and Exchange commission and Bank of America attorneys shot down in their civil lawsuit settlement agreement.
New York, NY–In a rare occurrence, a U.S. District Court Judge in Manhattan, refused to accept a settlement agreement between Bank of America (BofA) and attorneys for the U.S. Securities Exchange Commission (SEC) http://www.sec.gov ending a civil lawsuit filed by government lawyers for the federal regulatory agency. As reported by Reuters, Judge Jed Rakoff closed the court day on Wednesday with a “No” to the settlement agreement reached between BofA and the SEC after the regulatory agency filed suit against the banking giant who bought Merrill Lynch.
The civil suit was brought against Bank of America alleging the nation’s largest bank made false and misleading statements to shareholders regarding corporate bonuses paid to Merrill Lynch employees. The August 5, 2009, federal ruling adds to the ongoing mess of the Bank of America purchase of Merrill Lynch, which was completed on January 1, 2009. There have been billions of dollars of losses since BofA took over the defunct Merril Lynch. Shareholder anger, boardroom overhauls, and alarming facts surrounding financial company and banking industry executives accepting large sums of money in the form of bonuses, office make-overs, padded expense accounts, and other ‘percs’ has rocked the U.S. economy and American’s faith since the summer of 2008.
American taxpayer funds from the Troubled Asset Relief Program (TARP) has gone to Bank of America at the known total of $45 billion. Former Merrill Lynch executive, John Thain, left his new position with Bank of America in early January. News reports revealed the former Merrill Lynch leader spent $1.2 million renovating his personal office in 2008. Thain spent $87,000 on an area rug and $35,000 on a commode (politically correct term for non-functioning crapper). American taxpayers and laid off employees were shocked to discover some $20 billion in bonuses was paid to corporate leaders of faltering financial institutions in 2008. In early February, President Obama made a public statement claiming the bonuses taken by Wall Street and banking executives in the midst of a nationwide financial meltdown was “shameful”.
The lawsuit filed by federal regulators, SEC v. Bank of America Corp, U.S. District Court, Southern District of New York (Manhattan), No. 09-6829, alleges BofA authorized Merrill to pay close to $5.8 billion in corporate bonuses and told investors Merrill agreed not to award year-end performance bonuses or incentive pay before the merger closed. Two weeks after the merger, Bank of America leaders discovered Merrill’s losses and accepted an additional $20 billion of TARP money above the previous $25 million in taxpayer bailout funds the bank had already accepted.
Call me crazy, but as an American worker, I was under the impression “bonuses” were performance based plus in the financial industry were based on profits. How do companies payout close to $20 billion in performance bonuses and continue to file bankruptcy? Bravo to Federal Judge Jed Rakoff! Finally, an American stands up. Bank of America and the SEC will stand before Judge Rakoff in a hearing to answer the Judge’s questions on August 10, 2009. Speculation about Judge Rakoff’s refusal to accept the settlement agreement surrounds the idea that $33 million is a mere pittance compared to the $45 billion in federal taxpayer funds Bank of America has taken, and the $5.8 billion in authorized year-end bonuses to former Merrill employees. The New York Times, Associated Press and Reuters were all sources of information and facts for this educational news.
Legal news reporter, Heather L. Ryan, for New York government lawyers and corporate shareholders.