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The ruling directed both the agency and the bank to prepare for a possible trial that would begin no later than Feb. 1. The case involved $3.6 billion in bonuses that were paid by Merrill Lynch late last year, ...
The judge focused much of his criticism on the fact that the fine in the case would be paid by the bank’s shareholders, who were the ones that were supposed to have been injured by the lack of disclosure.
'Oscar Wilde once famously said that a cynic is someone 'who knows the price of everything and the value of nothing,'" wrote federal Judge Jed Rakoff yesterday in a scathing order rejecting a $33 million settlement between Bank of America and the SEC. Credit the judge with highlighting the particular political cynicism that drives too many of today's regulators.
The SEC alleged earlier this year that BofA had "materially lied" in shareholder communications prior to its takeover of Merrill Lynch, by failing to disclose bonuses owed to Merrill employees. New SEC chief Mary Schapiro figured she'd play off public outrage with a civil lawsuit that would earn some headlines. BofA in August settled for $33 million, neither admitting nor denying guilt.
Judge Rakoff was having none of it. In a 12-page opinion, he tore into the SEC for ignoring its own guidelines and penalizing shareholders rather than the individuals who supposedly acted improperly.
He noted that this decision might have been "made even easier" for BofA given "the U.S. Government provided [it] with a $40 billion or so 'bailout.'" What was a "mere $33 million . . . to get rid of a lawsuit?"
This is the result of Newt Gingrich's contract on America, with the deregulation of the banks. Regulations have a purpose, and that purpose is to prevent fraud.