Oooh, this is turning out to be fun. Judge Jed Rakoff is not putting up with Wall Street business as usual (no joke, that was part of the defense offered by Bank of America for its failure to disclose the amount of Merrill bonus payments in the merger proxy sent to shareholders to approve the deal: “of course, everyone knows people on Wall Street get bonuses”) and SEC lack of spine.
The judge want the real perps, the executives who failed to make the disclosure, to have their conduct examined and have fines levied on them. How novel! Calling for the top brass to be responsible for their actions!
From the Wall Street Journal:
In an order issued Monday, Judge Rakoff acknowledged the public interest in settling disputes rather than having them go to trial. Nonetheless, he wrote, “even upon applying the most deferential standard of review,” he was “forced to conclude that the proposed consent judgment is neither fair, nor reasonable, nor adequate” to protect the public interest.
In effect, Judge Rakoff found, the settlement would force the victims of the alleged misstatements–Bank of America shareholders–to pay an additional $33 million.
“It does not comport with the most elementary notions of justice and morality, in that it proposes that the shareholders who were the victims of the bank’s alleged misconduct now pay the penalty for that misconduct,” the judge wrote.
The judge has noted that SEC policy directs that culpable executives be punished for misleading shareholders, something the commission had not sought in this case.