Tuesday, August 11, 2009

Merrill Bonus Update: Issue did not die yesterday

(Again, please excuse, but time and preparation for other posts force my hand to compose mini-posts this morning on a few things that caught my eye - thanks!).

AmLawLitigationDaily is reporting this morning that yesterday's hearing in the S.D.N.Y. did not go so smoothly for BofA (as regards it's Merrill acquisition or Merrill bonuses paid). Recall: last week BofA settled with the SEC regarding questions of what BofA shareholders knew about the bonuses, and when. The settlement was not approved by the court, and this hearing was called to discuss whether the settlement funds were coming out of the federal bailout money BofA received in 2008.

Confusing: the Judge appeared incredulous of the $ 33 million amount in light of the Merrill bonuses - $ 3 billion - and the total federal bailout - $ 20 billion. But then the Judge was yet concerned that the $ 33 million would come out of those taxpayer funds ... (hmm ?).

Interesting and slightly alarming as an attorney: the Judge's questions suggest disapproval of the law firms' participation in how the BofA and Merrill merger occurred. The Judge asked SEC Counsel if Ken Lewis and John Thain should be held accountable for the SEC's allegations (a "materially misleading" proxy statement preceding the merger). The SEC's response: both relied on their attorneys' counsel. The Judge wants more details, and has requested BofA and the SEC submit briefs by August 24th regarding the writing of the proxy statement, the events that followed the statement, and information regarding the public's interest in the case.

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