Financial Crisis News Center

Court Disapproves Proposed Settlement of SEC Action Against Bank of America

This story appeared in Jim Hamilton's World of Securities Regulation

A federal judge has disapproved the proposed consent settlement of an SEC enforcement action against Bank of America upon finding that the settlement was neither fair, nor reasonable, nor adequate. It was not fair because it did not comport with the most elemental notions of justice and morality in that it proposed that the shareholders who were the victim’s of the bank’s alleged misconduct now pay the penalty for that misconduct. It was inadequate because the injunctive relief is pointless and $33 million is a trivial penalty for a false statement that materially infected a multi-billion-dollar merger. Finally, the court emphasized that a proposal asking the victims to pay a fine for their having been victimized is unreasonable. SEC v. Bank of America, SD NY, 09 Civ. 6829.

SEC Brief Defends BoA Consent Settlement before Federal Judge

This story appeared in Jim Hamilton's World of Securities Regulation

The SEC has filed a reply memorandum in federal court defending its consent settlement in the Bank of America enforcement action. The Commission believes that the proposed disposition is reasonable and in the public interest. The charges comport with the evidence as applied against the applicable legal standard and the proposed relief, including the penalty amount, takes full account of the seriousness of the violation and the need for deterrence, while giving serious consideration to all other relevant factors.

Paulson Discusses BofA/Merrill Acquisition

John M. Pachkowski, J.D., Editor, CCH Federal Banking Law Reporter and Bank Digest; Author, Anti-Money Laundering and Bank Secrecy: Compliance and the USA PATRIOT Act; Co-Author CCH Financial Privacy Law Guide.

The House Oversight and Government Reform Committee and Subcommittee on Domestic Policy continued its joint investigation of the Bank of America – Merrill Lynch merger with a hearing titled: “Bank of America and Merrill Lynch: How Did a Private Deal Turn Into a Federal Bailout? Part III.” This was the third in a series of hearings examining the events surrounding Bank of America’s (BofA) acquisition of Merrill Lynch and its receipt of Federal financial assistance. The sole witness for the hearing was the former Treasury Secretary Henry Paulson.

Bernanke Says Fed Acted with “Highest Integrity” in BoA/Merrill Deal

By Sarah Borchersen-Keto, CCH Washington News Bureau, Contributing Author, the CCH Federal Banking Law Reporter.

The Federal Reserve Board acted with the “highest integrity” during its involvement in Bank of America’s (BoA) acquisition of Merrill Lynch, Fed Chairman Ben Bernanke told Congress June 25, adding that in hindsight he has no regrets about how the transaction was carried out.

Bernanke called the merger a “very successful transaction” that had put both companies onto a healthy path, while offering a good deal for taxpayers.

Towns, Kucinich Request Bernanke Testimony on BofA-Merrill Merger

This story appeared in Bank Digest.

Chairman of the House Oversight and Government Reform Edolphus Towns, D-N.Y., and Chairman of the Domestic Policy Subcommittee Dennis Kucinich, D-Ohio, have requested that Federal Reserve Chairman Ben S. Bernanke to testify on Thursday, June 25, 2009, to a joint hearing of the full Committee and Domestic Policy Subcommittee. The purpose of the joint hearing is to examine events surrounding Bank of America’s acquisition of Merrill Lynch and its receipt of federal financial assistance.

House Committee Seeks Documents on Merrill Lynch Acquisition

This story appeared in Bank Digest.

Dennis Kucinich, D-Ohio, Chairman of the Domestic Policy Subcommittee, and Edolphus Towns, D-N.Y., Chairman of the Oversight and Government Reform Committee, have sent joint letters to Federal Reserve Board Chairman Ben S. Bernanke and Treasury Secretary Timothy Geithner demanding the production of documents pertaining to discussions between the Fed, Treasury and Bank of America about BOA's acquisition of Merrill Lynch & Co. The letters noted that these documents were asked for previously and have not been produced, and also refer to recent news reports that Bank of America's CEO was pressured not to disclose information about Merrill Lynch.

SEC Agrees to Review Bank of America Shareholder Disclosure

This story appeared in Bank Digest.

Rep. Dennis Kucinich, D-Ohio, Chairman of the Domestic Policy Subcommittee, has received a response to his April 6 inquiry to Mary Schapiro, Chairman of the Securities and Exchange Commission, regarding a proxy statement distributed by Bank of America to its stockholders in advance of a shareholder vote on a merger agreement with Merrill Lynch. The letter from Schapiro informed Kucinich that the SEC is reviewing Bank of America's disclosure for material omissions. In the April 6 letter, Kucinich asked Schapiro to determine if Bank of America was in violation of the 1934 Securities and Exchange Act for withholding information about $3.6 billion in bonuses to be paid to Merrill Lynch executives.