Final Rakoff Submission

UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF NEW YORK------------------------------------------------------:

Securities and Exchange Commission,

:

Plaintiff,

: Filed Electronically

v.

: No. 09 Civ. 6829 (JSR):

Bank of America Corporation,

:

Defendant.

:

------------------------------------------------------M

EMORANDUM OF

L

AW ON

B

EHALF OF

B

ANK OF

A

MERICA

C

ORPORATION

Lewis J. LimanShawn J. ChenCLEARY GOTTLIEB STEEN & HAMILTON LLPOne Liberty PlazaNew York, NY 10006-1470Tel.: (212) 225-2000Fax: (212) 225-3999Dated: August 24, 2009

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TABLE OF CONTENTSPage

TABLE OF AUTHORITIES.......................................................................... iiINTRODUCTION.......................................................................................... 1STATEMENT OF FACTS............................................................................. 3A. The Merger................................................................................. 3B. The Merger Agreement.............................................................. 4C. Merrill Lynch’s Intention to Pay 2008 IncentiveCompensation Was Disclosed.................................................... 6D. The Proxy Statement.................................................................. 9E. It Was Widely Understood From Merrill Lynch’sPublic Disclosures that Merrill Lynch Intended toPay Multi-Billions of Dollars in Year-End IncentiveCompensation............................................................................. 13F. Shareholders Approve the Merger............................................. 16G. Merrill Lynch’s MDCC Approves the 2008 VICP Awards...... 17H. The Merger Closes..................................................................... 18I. The SEC’s Complaint and the Proposed Settlement.................. 18ARGUMENT.................................................................................................. 20A. The Court Should Approve the Proposed Settlement................ 20B. The Settlement Should Be Approved Under AnyLegal Standard............................................................................ 29CONCLUSION............................................................................................... 31

.TABLE OF AUTHORITIESPage(s)Rules and Statutes

15 U.S.C. § 16(e)................................................................................................................ 3017 C.F.R. § 240.14a-101..................................................................................................... 13, 24Fed. R. Civ. P. 23(e)........................................................................................................... 30Rule 14a-9........................................................................................................................... 18, 20, 24, 27

Cases

Adams v. Bell

,

711 F.2d 161 (D.C. Cir. 1983)............................................................................................ 29, 30Beissinger v. Rockwood Computer Corp.

,

529 F. Supp. 770 (E.D. Pa. 1981)....................................................................................... 25, 26Donovan v. Robbins,752 F.2d 1170 (7th Cir. 1985)............................................................................................ 29GAF Corp. v. Heyman,

724 F.2d 727 (2d Cir. 1983)................................................................................................ 26Gerstle v. Gamble-Skogmo, Inc

.

,

478 F.2d 1281 (2d Cir. 1973).............................................................................................. 27In re Browning-Ferris Indus., Inc. S’holder Derivative Litig

.

,

830 F. Supp. 361 (S.D. Tex. 1993)..................................................................................... 25In re Keyspan Co. Sec. Litig

.

,

383 F. Supp. 2d 358 (E.D.N.Y. 2003)................................................................................ 25In re Merrill Lynch & Co., Inc. Research Reports Sec. Litig

.

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272 F. Supp. 2d 243 (S.D.N.Y. 2003)................................................................................. 26Janus Films v. Miller,801 F.2d 578 (2d Cir. 1986)................................................................................................ 29, 30Resnick v. Swartz,303 F.3d 147 (2d Cir. 2002)................................................................................................ 20ii