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It all started during the financial crisis. Banks and brokerage houses were tumbling down one after another. One of the biggest was the collapse of Merrill Lynch. Bank of America (BAC) negotiated the purchase of Merrill, but there was one hitch. BofA failed to appraise its stockholders that Merrill had approved $5.8 billion in bonuses to Merrill employees.
The agreement was struck. Everything was kept under the table until the SEC started an investigation into the matter. The SEC is famous for just giving a slap on the wrist to the biggest offenders. In this case the SEC agreed that BofA should pay a measly $33 million fine.
Meanwhile New York Attorney General, Andrew Cuomo, started his own investigation. He alleged the Ken Lewis and Joe Price conspired to hide the magnitude of Merrill's payments from stockholders.
The matter came before Judge Jed Rakoff, who ruled that the $33 million settlement was unsatisfactory and refused to accept it. Negotiations have been dragging on for several months. Finally, Judge Rakoff accepted a paltry $150 million settlement. In his ruling he said, "This is half-baked justice at best." Lewis and Price are still under personal investigation by Cuomo.
So there you have it. BofA neither admits nor denies any underlying allegations. The settlement avoids a trial, which was scheduled for next week.
This is an example of the wonderful system of justice that exists within the financial community. If you really mess up bad, go to the SEC. In this case, original $5.8 billion sum was whittled down eventually to $150 million.
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Reader Comments (Page 1 of 1)
3-06-2010 @ 10:41AM
bob schick said...
there you go again connie, the truth of the matter is judge jackoff specializes in halfbaked decisions, and you similarly halfbaked articles with half baked logic
short selling is the road to hell connie