Scrutiny for S.E.C. on Merrill Bonuses

Scrutiny for S.E.C. on Merrill Bonuses - 8/26/2009

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HEADLINES \| SETTLEMENTS AND DISMISSALS \| COURT FILINGS LINKS TO OTHER NEWS \| NEWS ARCHIVE	HEADLINES ARCHIVED SETTLEMENTS AND DISMISSALS ARCHIVED

HEADLINE NEWS:

Scrutiny for S.E.C. on Merrill Bonuses
Louise Story

International Herald Tribune. August 26, 2009
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EXCERPT: A federal judge told the Securities and Exchange Commission on Tuesday to give a better explanation of why it had agreed to a settlement with Bank of America over bonus disclosures without pressing the bank’s executives harder. The order, by Judge Jed S. Rakoff, came a day after the agency revealed that lawyers advised Bank of America’s executives not to disclose in a shareholder proxy billions of dollars in bonuses paid by Merrill Lynch just before the two merged. This month the judge asked the two sides to say who at the bank had made the decision not to disclose Merrill’s planned bonuses just ahead of a shareholder vote on the merger. Both responded in a filing Monday by citing lawyers for the bank, although Bank of America did not name the executives who had approved the lawyers’ decisions. The S.E.C. said it had not pressed the issue further because the bank wanted its communications with its lawyers to remain private under attorney-client privilege. And without such information, the S.E.C. could not consider charges against individuals at the bank. Responding swiftly, the judge questioned why the S.E.C. did not insist that Bank of America waive attorney-client privilege before striking a $33 million settlement. He also questioned whether bank executives — or the outside lawyers — should be charged in the case. “If the company does not waive the privilege,” the judge wrote in his order, “the culpability of both the corporate officer and the company counsel will remain beyond scrutiny. This seems so at war with common sense.” The judge added that the filings Monday by the S.E.C. and Bank of America raised more questions than they answered, and set a deadline of Sept. 9 for both parties to come back with fuller explanations of who should be held accountable for the bonus disclosure decision.

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