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The Securities and Exchange Commission and Bank of America previously tried to settle SEC's claims against BOA, which were filed as a result of BOA not informing its shareholders that BOA acquired Merrill Lynch knowing that Merrill Lynch was paying out huge bonuses. The BOA - SEC first try at settling was not approved by the United States District Court in which the SEC Complaint was pending. The reasons are examined at length, with links to the Opinion, in the post here on September 14, 2009. Other posts on the same proceedings include August 13, August 25, September 13, and September 22, 2009 ("Stay tuned. The SEC is unlikely to attempt to try this case. Based on their past record, the SEC is much more likely to try again to settle.").
In basic terms, the first settlement proposal was not approved for two major reasons addressed in the Opinion of the United States District Court. One such announced reason was that the BOA Shareholders would have to pay the penalty to which BOA and the SEC agreed as a part of their settlement.
The other reason addressed by the Court in its Opinion was that no charges were made against the individual officers of BOA who engaged in the conduct that the SEC alleged warranted penalties against BOA. Instead, under the first settlement proposed by the SEC and BOA, BOA was allowed to continue to blame its lawyers for its conduct and the Court wondered aloud why the lawyers should not then pay the penalty if that was true. See the post here of September 14, 2009.
The SEC and the BOA are at it again. On February 4, 2010, they filed a proposed "Final Consent Judgment As To Defendant Bank of America Corporation," along with their apparently joint "Statement of Facts" that they relied on to reach their second, proposed settlement: Download Proposed BOA Final Consent Judgment With Statement of Facts (Filed 02.04.10 in SDNY Case No. 09civ6829). (Their "Statement of Facts" begins on page 19 of the linked pdf.) BOA and the SEC also filed Memorandums of Law that day.
A Hearing was scheduled on the proposed settlement for Monday, February 8, 2010, according to the Online Docket of this case. As of the time of this post, no known Order has been entered as yet.
In the interim, the New York State Attorney General has filed a Complaint against both Bank of America and its former Chief Executive Officer, Mr. Ken Lewis, and its Chief Financial Officer, alleging misrepresentation, among other things, based upon the same set of operative facts. The allegations and background of the Complaint filed by the New York Attorney General are generally explored by Zachary A. Goldfarb and Tomoeh Murakami Tse, "N.Y. Attorney General Cuomo Charges Bank of America With Fraud" (Washington Post Online, Friday, February 5, 2010).
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