Tuesday, January 12, 2010

ExeComp in the News: SEC Goes For the Kill, and then there's Attorney General Cuomo, AIG, and London Bankers

Bank of America. The core of the SEC charges to date (trial beginning March 1, 2010) focuses on the alleged improper BofA disclosure of the Merrill bonsues to its shareholders. The SEC has asked Judge Rakoff of the S.D.N.Y. to add an additional allegation – failure to properly disclose the Merrill 4Q 2008 losses! Rakoff has said the additional allegation can not be added to the current litigation, but the SEC can always file a new complaint. How many lawyers' kids can go through grad school on BofA's tab: check it out here, here, or here.

City of London bankers are threatening to leave town. (Really? You're going to have your spouse leave his job, pull your kids out of school, buy and sell property, and get vet paperwork done on the dog ... Really?) Though admittedly, this is a lot to handle at once: in addition to Darling's intent to levy a one-time 50% tax on bonuses equal to or greater than $ 40,700, the FSA announced recently that compensation for banking employees earning $1.6 million per year will have their compensation deferred - as much as 60% and for as long as three years! Check it out here or here.

In response to the potential 50% tax, financial firms have indicated they will just pay their employees more money (incidentally, at the cost of the shareholders). In this way, the tax will be spread out over the global resources of the organization. Okay. Or, you could just pay the one-time tax on bonuses. One-time. On a bonus.

Remember Andrew Cuomo? Yeah – he didn't think so either, so he's leveraged the Martin Act again and made a demand this week on eight companies that received government financing to disclose their 2009 bonus pool information. When is that election again? Hope it comes and goes before folks realize earlier Cuomo threats leveraging fraudulent conveyance allegations against AIG – which culminated in a very public AIG "we'll give almost all of it back" – has in fact only produced a fractional return of the bonuses. What's a candidate to do? Check it out here.

Speaking of AIG – a new GC is being named: Thomas Russo (previously with Lehman). Here's hoping he rolls with the Compensation Czar's style more easily than his predecessor. Or, maybe AIG could just pay the $183 billion in federal financing back.

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