Judge Still Not Satisfied with BofA, SEC Settlement

U.S. District Judge Jed Rakoff refused to sign off on Bank of America’s $33-million settlement with the Securities and Exchange Commission (SEC) over disclosures of bonuses paid to Merrill Lynch executives.

On Monday, both sides filed legal briefs defending the proposed settlement (“BofA, SEC Defend Proposed Settlement”). However, U.S. District Judge Jed Rakoff said he wants a better explanation from both parties by September 9, according to news reports.

More specifically, Rakoff said in an order today that he wants to know why BofA settled its case if it still believes its disclosure was appropriate, Bloomberg reported. He also asked whether the lawyers behind the false proxy statement should be held responsible.

Furthermore, Rakoff wants to know why the SEC accepted the bank’s claim that executives who issued a misleading statement relied on lawyer’s advice. He also wants to know why the agency didn’t press the bank to waive attorney-client privilege to keep communications with counsel confidential, according to the news report.

The case is Securities and Exchange Commission v. Bank of America Corp., 09-cv-6829, U.S. District Court, Southern District of New York.