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This updates a post here on February 9, 2010 which, in turn, brought up to date a continuing story told in many posts in 2009, some of which are listed there.The Securities and Exchange Commission filed civil fraud charges against Bank of America. The alleged basis of the lawsuit was BOA's silence to its Shareholders about huge bonuses and even greater losses incurred by Merrill Lynch but not publicly announced by Merrill at the time of BOA's proposed acquisition of Merrill two years ago.
The New York Attorney General filed a separate civil fraud lawsuit after the SEC announced its latest proposed settlement in the SEC's Federal case against BOA. The New York AG's lawsuit includes charges of fraud upon the Federal Government for not telling the Federal Government the same things that BOA allegedly did not tell its Shareholders -- all the while applying for Federal Taxpayer Money from TARP. BOA and two of its former Officers were named as Defendants by the New York AG. In contrast, the SEC declined to include BOA's former CEO and CFO as Defendants in its previously filed lawsuit. In fact, the Federal Judge who rejected a previous failed attempt by the SEC to settle with BOA why the SEC seemingly went out of its way to attempt to exonerate the Officers from charges of wrongdoing and did not sue them.
The SEC has asked for Federal Court approval of another proposed settlement attempt.
At a Hearing last week, the Federal Judge asked to approve the latest settlement proposal had questions, again. One of his questions is now reported as asking whether BOA would agree to the Court and the SEC having "a role in the selection of the bank's outside compensation consultant." BOA's lawyers have sent the Judge a letter saying, in effect, 'no.' BOA's lawyers wrote to the Judge that BOA's pre-existing compensation scheme for shifting Shareholder dollars to Executive Compensation is "'appropriately tailored,'" according to Louise Story, "Bank of America Opposes Judge's Proposal for an Outside Pay Consultant" p. B4, col. 1 (New York Times Nat'l ed., "Business Day" Section, Thursday, February 18, 2010).
How is that tailoring going? Time will tell. The Federal Judge reportedly will decide by Monday, February 22, 2010 whether to approve or reject the proposed settlement. The SEC's case, which it has repeatedly attempted to settle without going to Trial, is scheduled to go to Trial otherwise on March 1, 2010.
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