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Human Rights Alert DN: cn=Joseph
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Fax: 323.488.9697; Email: jz12345@earthlink.net c=US
Blog: http://human-rights-alert.blogspot.com/ Date: 2010.11.07
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10-11-07 SEC v BAC (1:09-cv -6829) at the US District Court, Southern District of New York –
Washington Post reports

The litigation of the case was extensively covered by major US media outlets and also by international
media. The Washington Post published multiple reports during the course of the litigation. However,
there is no reason to assume that any media, which reported of the litigation ever gained access to
authenticated records in the case. Moreover, notices were forwarded to media outlet regarding the
denial of access to court records. Regardless, media continued to report on the case, with no basis in
valid and effectual court records.
Following are sample reports from the Washington Post:
1. August 4, 2009, Bank of America Pays $33 Million to Settle Merrill Bonus Charges;
2. August 7, 2009, Bank of America Settlement Hits Snag Over Money's Source;
3. August 11, 2009, Judge Delays Bank of America's Settlement;
4. September 15, 2009, Judge Says SEC Failed Investors;
5. September 22, 2009, SEC Gets Tougher With Bank of America;
6. January 11, 2010, SEC seeking more charges against Bank of America over Merrill deal;
7. January 12, 2010, SEC broadens charges on Bank of America;
8. February 23, 2010, Judge criticizes, but approves, settlement with Bank of America.
11/7/2010 Bank of America Pays SEC $33 Million t…
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What Fed's action means for y our finances

Bank of America Pays $33 Million to Settle Merrill Bonus


Charges
By Zachary A. Goldfarb
Washington Post Staff Writer
Tuesday, August 4, 2009

Bank of America agreed to pay $33 million on Monday


to settle federal charges that it hid from investors plans
to pay billions of dollars in bonuses to employees of
Merrill Lynch, the troubled investment bank it agreed
to buy last fall.

THIS STORY
Bank of Am erica Pays $33 Million to
Settle Merrill Bonus Charges
Q&A, Transcript: SEC Charges
Bank of Am erica Lied to Investors

The Securities and Exchange Commission accused the


firm of misleading shareholders when the bank asked
Bank of America CEO Kenneth D. Lew is says
them to approve the deal, which was ultimately he acted properly. (Joshua Roberts -
concluded under intense federal pressure as Merrill Bloomberg New s)

Lynch teetered on the verge of collapse. Enlarge Photo

TOOLBOX
The SEC alleged that Bank of America told investors
that the bonuses would not be paid without its consent. Resize Print E-m ail

In fact, Bank of America had secretly authorized $5.8 Yahoo! Buzz

billion in bonuses to be paid by Merrill Lynch, the SEC


said. COMMENT

Bank of America did not admit to or deny the 124 Comments | View All »
allegations in agreeing to settle the case, one of the COMMENTS ARE CLOSED
highest profile to come out of the financial crisis so
far. WHO'S BLOGGING

» Links to this article


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The case against Bank of America is the first


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Bank of America's acquisition of Merrill Lynch has come under review by the SEC,
Department of Justice, New York attorney general and congressional investigators. The
deal, completed in January, has attracted such scrutiny in part because federal officials
played a central role in pushing the bank to buy Merrill Lynch and offered tens of billions
in bailout dollars to support the purchase.

The settlement drew some criticism Monday, both because the fine was not larger and
because no executive was charged with wrongdoing.

"It is always people, not the shell legal entity, that engage in illegal behavior. And that's
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"Charging the car does nothing to prevent the driver from going out and driving recklessly Reviews Into Big
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Rep. Dennis J. Kucinich (D-Ohio), who oversees a House Oversight and Government
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See All of Slate »

CONTINUED 1 2 Next >

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11/7/2010 g p y g Bank of America
y yPays
g SEC $33 Million t… p

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11/7/2010 Bank of America Pays SEC $33 Million t…

Bank of America Pays $33 Million to Settle


Merrill Bonus Charges
By Zachary A. Goldfarb
Washington Post Staff Writer
Tuesday, August 4, 2009

Bank of America agreed to pay $33 million on Monday to settle federal charges
that it hid from investors plans to pay billions of dollars in bonuses to employees of
Merrill Lynch, the troubled investment bank it agreed to buy last fall.

The Securities and Exchange Commission accused the firm of misleading


shareholders when the bank asked them to approve the deal, which was ultimately
concluded under intense federal pressure as Merrill Lynch teetered on the verge of
collapse.

The SEC alleged that Bank of America told investors that the bonuses would not
be paid without its consent. In fact, Bank of America had secretly authorized $5.8
billion in bonuses to be paid by Merrill Lynch, the SEC said.

Bank of America did not admit to or deny the allegations in agreeing to settle the
case, one of the highest profile to come out of the financial crisis so far.

"As Merrill was on the brink of bankruptcy and posting record losses, Bank of
America agreed to allow Merrill to pay its executives billions of dollars in bonuses,"
said David Rosenfeld, associate director of the SEC's New York office.
"Shareholders were not told about this agreement at the time they voted on the
merger."

Bank of America spokesman Scott Silvestri said the company considered the
settlement a "constructive conclusion" to the dispute over the Merrill bonuses. "This
is an important step forward for Bank of America and allows us to focus our
energies on enhancing stockholder value by continuing to execute our strategies for
the long-term success of our business," he said.

In recent months, the financial crisis has moved into a new phase of accountability as federal regulators and law
enforcement officials have ramped up efforts to punish firms and executives that contributed to the meltdown.
The SEC and Department of Justice have dozens of ongoing investigations into companies at the heart of the
crisis, including Fannie Mae, Freddie Mac, Citigroup and American International Group.

The case against Bank of America is the first one brought by the federal government against a financial firm
closely involved in the crisis. The SEC has already filed suit against individual executives accused of wrongdoing
in connection with the meltdown.

Bank of America's acquisition of Merrill Lynch has come under review by the SEC, Department of Justice, New
washingtonpost.com/…/AR2009080301… 1/3
11/7/2010 Bank of America Pays SEC $33 Million t…
York attorney general and congressional investigators. The deal, completed in January, has attracted such
scrutiny in part because federal officials played a central role in pushing the bank to buy Merrill Lynch and
offered tens of billions in bailout dollars to support the purchase.

The settlement drew some criticism Monday, both because the fine was not larger and because no executive was
charged with wrongdoing.

"It is always people, not the shell legal entity, that engage in illegal behavior. And that's who you want to hold
accountable," said Lynn Turner, a former SEC chief accountant. "Charging the car does nothing to prevent the
driver from going out and driving recklessly again."

Rep. Dennis J. Kucinich (D-Ohio), who oversees a House Oversight and Government Reform subcommittee
that has been probing the deal, blasted the settlement amount. "Apparently corporate crime in America pays, and
for those who approved and received bonuses it pays handsomely," he said in a statement.

SEC officials said the penalty was the largest ever imposed by the agency for a violation of the requirement that
companies disclose relevant information in connection with shareholder votes.

Bank of America agreed to buy Merrill Lynch for $50 billion in a deal that frightened officials arranged in a single
weekend in September. At the time, the prospect of several major corporate failures, including that of Merrill
Lynch, was threatening to bring down the global financial system. Bank of America later considered pulling out of
the deal after discovering the depth of the losses at the investment bank. The federal government provided $45
billion in emergency aid from the Troubled Assets Relief Program, not only to help Bank of America absorb
Merrill but also to keep Bank of America itself afloat.

In a Nov. 3 regulatory filing ahead of a shareholder vote on the deal, Bank of America described the terms of the
acquisition to investors. While Bank of America said Merrill Lynch would not pay any bonuses without
permission, these had already been promised, the SEC said, and Merrill Lynch paid $3.6 billion in bonuses to
employees after the merger was approved.

Lawmakers have questioned whether Bank of America chief executive Kenneth D. Lewis, as well as officials at
the Federal Reserve and Treasury Department, concealed important information from investors as they worked
to close the Merrill Lynch deal. Lewis has said he acted properly at all times.

Lewis has faced increasing pressure to shake up Bank of America's top ranks. In April, he gave up the title of
chairman, and many of the company's directors have resigned. In addition, the bank on Monday shuffled its
senior officials, putting several executives in position to replace Lewis and fueling speculation about who will
succeed him.
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11/7/2010 Source of Money Hangs Up Bank of A…

Bank of America Settlement Hits


Snag Over Money's Source
By Zachary A. Goldfarb
Washington Post Staff Writer
Friday, August 7, 2009

The decision by a federal judge this week to withhold


approval for Bank of America's $33 million settlement with
the Securities and Exchange Commission has left the high-
profile case up in the air while he examines whether the
bank would pay the penalty using taxpayer dollars received
under the federal bailout of financial firms.

Earlier this week, Bank of America agreed to pay the fine to


settle charges that it hid from shareholders plans to pay billions of dollars in bonuses to Merrill Lynch, the
troubled investment bank it bought earlier this year. Judge Jed S. Rakoff of the U.S. District Court for the
Southern District of New York declined Wednesday to endorse the settlement. He scheduled a hearing for
Monday afternoon to discuss the issue.

Rakoff said the settlement agreement had failed to clarify several aspects of the case.

"Despite the public importance of this case, the proposed Consent Judgment would leave uncertain the truth of
the very serious allegations made in the Complaint," Rakoff wrote in an order. He added, "The proposed
Consent Judgment in no way specifies the basis for the $33 million figure or whether any of this money is derived
directly or indirectly from the $20 billion in public funds previously advanced to Bank of America as part of its
'bail out.' "

A Bank of America spokesman said it was virtually impossible that Bank of America would use money from the
government to pay the settlement. The bank earned $7.5 billion in profit this year.

"We cannot envision any scenario under which [bailout] money would be used to fund the settlement," said Scott
Silvestri, a Bank of America spokesman.

SEC officials said they took into account Bank of America's status as a company that has received public money
in devising the settlement, but that these considerations did not affect the outcome of the case. Officials said they
were not sure if the judge's concerns were merely a procedural roadblock or something that could significantly
disrupt the case.

The size of the penalty was determined in negotiations with Bank of America. The penalty was for the lowest tier
of offenses -- those involving a violation of securities laws but not fraud, which is a more serious crime, according
to people familiar with the matter.

Bank of America's purchase of Merrill Lynch, which was completed under heavy pressure from senior officials at
the Treasury and Federal Reserve, has drawn legal and political scrutiny from Capitol Hill and regulators.
washingtonpost.com/…/AR2009080601… 1/2
11/7/2010 Source of Money Hangs Up Bank of A…

Lawmakers have questioned whether Bank of America executives and federal officials worked to conceal
important details of the deal for regulators and the public. These include the bonuses and growing losses at
Merrill Lynch.
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11/7/2010 Judge Refuses to Approve Bank of Am…

Judge Delays Bank of America's


Settlement
By Zachary A. Goldfarb and Tomoeh Murakami Tse
Washington Post Staff Writers
Tuesday, August 11, 2009

NEW YORK, Aug. 10 -- A federal judge refused on


Monday to sign off on a $33 million settlement between
Bank of America and the Securities and Exchange
Commission, demanding to know why the agency
accepted such a small penalty.

Judge Jed S. Rakoff of the U.S. District Court for the


Southern District of New York also asked for the names of
the executives allegedly involved in concealing from investors plans to pay billions of dollars in bonuses at Merrill
Lynch, the troubled firm Bank of America bought during the financial crisis.

If Bank of America "misled the shareholders, as you assert about a multi-billion dollar matter, isn't there
something strangely askew in a fine of $33 million?" Rakoff asked SEC lawyers. "[I]t is very difficult for me to
see how the proposed settlement . . . is remotely reasonable."

Bank of America's lawyers tried to assuage the judge's concerns that the bank was planning to pay the settlement
out of funds it received from taxpayers as part of the federal bailout of the financial sector, insisting the money
would come from elsewhere. However, in response to a separate earlier inquiry, the bank had said it could not
"segregate" government aid for one purpose or another.

Rakoff's refusal to endorse the settlement is a setback for the SEC in its attempt to bring high-profile cases linked
to the financial crisis.

It also puts the nation's top Wall Street cop in an awkward spot: on the same side of the bank that it is taking
action against. Without the judge's consent, the settlement is not final. Rakoff gave the SEC and Bank of America
until Aug. 24 to provide more details about the deal.

During Monday's hearing, Rakoff pressed lawyers on who decided what to reveal to shareholders in a
November proxy statement, and he asked whether Bank of America chief executive Kenneth D. Lewis and
former Merrill Lynch chief executive John Thain might be involved. "Was it some sort of ghost?" Rakoff asked.
"Who were the people? . . . If you are correct that this proxy statement was materially misleading, then at a
minimum Mr. Thain and Mr. Lewis would seem to be responsible for that, yes?"

An SEC lawyer, Maureen Lewis, said the executives relied on their lawyers in signing the proxy statements. SEC
lawyers added that various factors go into determining a settlement, including precedent, of which the case has
few. They noted that another bank, Wachovia, had agreed to pay $37 million to settle allegations that it failed to
disclose $500 million in bonuses

washingtonpost.com/…/AR2009081002… 1/2
11/7/2010 Judge Refuses to Approve Bank of Am…
Bank of America said no one at the firm did anything intentionally wrong and it continues to believe the
settlement, which does not require the bank to admit or deny wrongdoing, is "constructive."

Bank of America's claim that money for the settlement wouldn't come from funds it has received as part of the
Troubled Assets Relief Program appeared to be at odds with what the bank had told the Treasury Department's
special inspector general about its ability to track funds.

At the time, the inspector general had asked banks receiving taxpayer aid for detailed information on how they
were using the assistance, in particular whether they were using it to make loans. In a May 11 response, Bank of
America said it did not separate out the bailout funds it received on its balance sheet, according to a recent
report by the special inspector general.

"Since all TARP investment funds are part of our operating capital, they cannot effectively be segregated," Bank
of America wrote to the special inspector general, according to the report.

Bank of America has received a total of $45 billion from the government, including investments made to ensure
the bank's stability and to help it absorb Merrill Lynch. A Bank of America spokesman declined to comment on
the possible contradiction.

Separately, Bank of America agreed Monday to pay $55 million to settle a class-action lawsuit by employees of
Countywide Financial, which it bought last fall. The employees accused Countrywide of concealing the
company's deteriorating health and making them lose much of their retirement funds. A judge must rule on the
settlement, which doesn't involve the SEC, later this month.

Goldfarb reported from Washington.


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11/7/2010 Judge Rejects Bank of America-SEC Set…

Judge Says SEC Failed Investors


Settlement Over Merrill Lynch Bonuses Would Put Burden
on Victims, He Says

By Zachary A. Goldfarb
Washington Post Staff Writer
Tuesday, September 15, 2009

A federal judge on Monday rejected a $33 million


settlement between the Securities and Exchange
Commission and Bank of America, asserting that the agency
bungled its basic job of protecting investors from the
wrongdoing of executives.

In a scathing critique, Judge Jed S. Rakoff said the costs of


the settlement would essentially be borne by the victims, in this case Bank of America's shareholders. The SEC
had accused Bank of America of failing to adequately disclose plans to allow billions of dollars in bonuses to be
paid to Merrill Lynch executives before shareholders were asked to approve a marriage between the two
companies.

The SEC agreed to allow Bank of America -- and by extension its investors -- to pay $33 million to settle the
charges without admitting fault. Rakoff called this arrangement a "contrivance designed to provide the SEC with
the facade of enforcement" that nonetheless "victimizes" shareholders.

The ruling is a setback for an agency that is seeking to burnish its image after being roundly criticized for inaction
in the months leading up to the financial crisis. And it comes as other regulators appear to be eyeing charges
against top Bank of America executives. New York Attorney General Andrew M. Cuomo sent sharply worded
letters to Bank of America recently that strongly signaled his intent to file securities fraud charges against the
bank's executives related to the disclosures.

A person familiar with the Cuomo's investigation said Monday that his office is in the final stages of drawing up
charges against senior Bank of America executives.

Rakoff did not only direct his criticism at the SEC. He also attacked Bank of America's top executives for
attempting to shield themselves at the expense of the company's shareholders.

"This case suggests a rather cynical relationship between the parties: the S.E.C. gets to claim that it is exposing
wrongdoing on the part of the Bank of America in a high-profile merger; the Bank's management gets to claim
that they have been coerced into an onerous settlement by overzealous regulators," Rakoff wrote in his order.
"And all this is done at the expense, not only of the shareholders, but also of the truth."

February Trial Ordered

Rakoff ordered that the case go to trial in February. The SEC and Bank of America each said Monday that they
are reviewing their next legal steps. The SEC could move forward, drop the matter, appeal Rakoff's decision or
washingtonpost.com/…/AR2009091401… 1/3
11/7/2010 Judge Rejects Bank of America-SEC Set…
renegotiate the agreement.

In reviewing the settlement, Rakoff said he wanted to know why the SEC didn't charge individual executives at
Bank of America and Merrill Lynch who oversaw the allegedly faulty disclosures. The SEC said that Bank of
America's executives relied on advice from their lawyers and that there was no evidence they intended to mislead
shareholders. Bank of America, meanwhile, said it was settling to avoid the hassle of an extended, expensive
case against one of its regulators. It also claimed that it had done nothing wrong.

Rakoff was not persuaded.

"It is not fair, first and foremost, because it does not comport with the most elementary notions of justice and
morality, in that it proposes that the shareholders who were the victims of the Bank's alleged misconduct now
pay the penalty for that misconduct," Rakoff wrote.

Rakoff also had harsh words for the SEC's contention that the settlement would punish Bank of America's
executives by diminishing their reputation in the eyes of the bank's shareholders.

"The notion that Bank of America shareholders, having been lied to blatantly in connection with the multi-billion-
dollar purchase of a huge, nearly-bankrupt company, need to lose another $33 million of their money in order to
[quoting from the SEC's brief] 'better assess the quality and performance of management' is absurd," Rakoff
wrote.

Injunction Criticized

In addition, as part of the settlement, the SEC is seeking an injunction barring Bank of America from violating
securities laws again. But because Bank of America maintains that it did nothing wrong, such an injunction would
mean nothing, Rakoff said.

"Notwithstanding the injunctive relief here sought by the S.E.C., the Bank would feel free to issue exactly the
same kind of proxy statement [omitting bonuses] in the future," he wrote.

SEC spokesman John Nester said the agency continues to believe the proposed settlement "balanced all of the
relevant considerations" and said it would review Rakoff's order.

Bank of America spokesman Scott Silvestri said the firm disagrees with Rakoff's ruling. "Bank of America
believes the facts demonstrate that proper disclosure was made to shareholders about Merrill bonuses. We are
prepared to prove that through litigation," he said.

Rakoff, of the Southern District of New York, is said to be a bit of a legal agitator who injects his views into
settlements between other parties. For example, in 2003, he refused to consent to an SEC settlement with the
telecommunications company WorldCom, which was accused of a massive accounting fraud. Rakoff boosted the
financial penalty and altered the terms of the settlement to benefit shareholders.

Staff writer Tomoeh Murakami Tse in New York contributed to this report.
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11/7/2010 SEC Gets Tougher With Bank of America

SEC Gets Tougher With Bank of


America
Probe Widened Into Merrill Lynch Deal

By Zachary A. Goldfarb
Washington Post Staff Writer
Tuesday, September 22, 2009

The Securities and Exchange Commission said Monday that


it will broaden its investigation into alleged wrongdoing at
Bank of America and may seek additional charges as it
prepares for a trial against the bank.

The move was the latest effort by the agency to combat the
impression that it took a soft approach in a high-profile
investigation stemming from Bank of America's acquisition last year of Merrill Lynch. The SEC suffered a serious
setback last week when a federal judge ordered a trial after rejecting a $33 million settlement in the case.

"[W]e will vigorously pursue our charges against Bank of America and take steps to prove our case in court," the
SEC said in a statement. "We will use the additional discovery available in the litigation to further pursue the facts
and determine whether to seek the court's permission to bring additional charges in this case."

In August, the SEC accused Bank of America of concealing from investors the plans to pay billions of dollars in
bonuses to employees of Merrill Lynch, the troubled Wall Street firm it bought at the peak of the financial crisis.
Bank of America agreed to settle, without admitting or denying charges.

But Judge Jed S. Rakoff of the Southern District of New York rejected the settlement, saying it suited the
immediate interests of the SEC and Bank of America, but neither the public interest nor that of Bank of
America's shareholders.

He called the settlement a "contrivance" that allowed the SEC to appear to be an aggressive regulator and that
allowed Bank of America executives to skirt charges while shareholders paid the penalty.

Rakoff ordered the case to trial in February.

As required, the SEC and Bank of America filed a plan to try the case with the judge. That doesn't necessarily
mean a trial will occur. Even as it prepares, the agency could still appeal Rakoff's order to the U.S. Court of
Appeals for the 2nd Circuit. The SEC on Monday left this option open.

It is rare for a judge to interfere with a settlement between the SEC and a company.

New York Attorney General Andrew M. Cuomo and congressional investigators are also probing the Bank of
America-Merrill Lynch deal. Sources familiar with Cuomo's investigation have said he is drawing up charges
against top Bank of America executives.

washingtonpost.com/…/AR2009092103… 1/2
11/7/2010 SEC Gets Tougher With Bank of America
Bank of America has maintained that it did nothing wrong in its disclosures, a position it repeated on Monday.
"We intend to vigorously defend ourselves in court," a spokesman for the bank said.

The SEC's statement suggested that the agency thinks it will have more legal tools in coming months to investigate
Bank of America than it did during its original probe.

Rakoff sharply criticized the agency for not bringing action against Bank of America executives or lawyers the
SEC relied on for advice in determining what to tell investors.

The SEC has said Bank of America declined to waive its attorney-client privilege and, as a result, the agency
could not learn what was discussed between Bank of America executives and their lawyers.

But the agency has said a judicial proceeding, unlike an investigation, can require companies to waive the
privilege.

As a result, the upcoming trial may require Bank of America to disclose what was said between lawyers and
executives in the course of preparing for the Merrill Lynch acquisition.

Separately, Reuters reported, Bank of America failed to meet a Monday deadline to give congressional
investigators further details about its acquisition of Merrill Lynch, said a spokeswoman for the House Oversight
and Government Reform Committee, which is investigating details surrounding the deal. According to the news
service, a Bank of America spokesman said that it is working with the panel's chairman, Rep. Edolphus Towns
(D-N.Y.), and that an executive will meet with Towns today to discuss providing the necessary documents
"without violating attorney-client privilege."
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11/7/2010 SEC Gets Tougher With Bank of America

SEC Gets Tougher With Bank of


America
Probe Widened Into Merrill Lynch Deal

By Zachary A. Goldfarb
Washington Post Staff Writer
Tuesday, September 22, 2009

The Securities and Exchange Commission said Monday that


it will broaden its investigation into alleged wrongdoing at
Bank of America and may seek additional charges as it
prepares for a trial against the bank.

The move was the latest effort by the agency to combat the
impression that it took a soft approach in a high-profile
investigation stemming from Bank of America's acquisition last year of Merrill Lynch. The SEC suffered a serious
setback last week when a federal judge ordered a trial after rejecting a $33 million settlement in the case.

"[W]e will vigorously pursue our charges against Bank of America and take steps to prove our case in court," the
SEC said in a statement. "We will use the additional discovery available in the litigation to further pursue the facts
and determine whether to seek the court's permission to bring additional charges in this case."

In August, the SEC accused Bank of America of concealing from investors the plans to pay billions of dollars in
bonuses to employees of Merrill Lynch, the troubled Wall Street firm it bought at the peak of the financial crisis.
Bank of America agreed to settle, without admitting or denying charges.

But Judge Jed S. Rakoff of the Southern District of New York rejected the settlement, saying it suited the
immediate interests of the SEC and Bank of America, but neither the public interest nor that of Bank of
America's shareholders.

He called the settlement a "contrivance" that allowed the SEC to appear to be an aggressive regulator and that
allowed Bank of America executives to skirt charges while shareholders paid the penalty.

Rakoff ordered the case to trial in February.

As required, the SEC and Bank of America filed a plan to try the case with the judge. That doesn't necessarily
mean a trial will occur. Even as it prepares, the agency could still appeal Rakoff's order to the U.S. Court of
Appeals for the 2nd Circuit. The SEC on Monday left this option open.

It is rare for a judge to interfere with a settlement between the SEC and a company.

New York Attorney General Andrew M. Cuomo and congressional investigators are also probing the Bank of
America-Merrill Lynch deal. Sources familiar with Cuomo's investigation have said he is drawing up charges
against top Bank of America executives.

washingtonpost.com/…/AR2009092103… 1/2
11/7/2010 SEC Gets Tougher With Bank of America
Bank of America has maintained that it did nothing wrong in its disclosures, a position it repeated on Monday.
"We intend to vigorously defend ourselves in court," a spokesman for the bank said.

The SEC's statement suggested that the agency thinks it will have more legal tools in coming months to investigate
Bank of America than it did during its original probe.

Rakoff sharply criticized the agency for not bringing action against Bank of America executives or lawyers the
SEC relied on for advice in determining what to tell investors.

The SEC has said Bank of America declined to waive its attorney-client privilege and, as a result, the agency
could not learn what was discussed between Bank of America executives and their lawyers.

But the agency has said a judicial proceeding, unlike an investigation, can require companies to waive the
privilege.

As a result, the upcoming trial may require Bank of America to disclose what was said between lawyers and
executives in the course of preparing for the Merrill Lynch acquisition.

Separately, Reuters reported, Bank of America failed to meet a Monday deadline to give congressional
investigators further details about its acquisition of Merrill Lynch, said a spokeswoman for the House Oversight
and Government Reform Committee, which is investigating details surrounding the deal. According to the news
service, a Bank of America spokesman said that it is working with the panel's chairman, Rep. Edolphus Towns
(D-N.Y.), and that an executive will meet with Towns today to discuss providing the necessary documents
"without violating attorney-client privilege."
View all com m ents that have been posted about this article.

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SEC seeking more charges against Bank of America over Merrill
deal
The Securities and Exchange Commission is seeking additional charges against Bank of
America over its looking-worse-by-the-moment purchase of brokerage Merrill Lynch early
last year.
These additional charges stem from Bank of America's failure to disclose billions of dollars in
mounting losses at Merrill before BofA shareholders were asked to vote on the merger.
The SEC sued BofA last year over $3 billion in bonuses paid to Merrill employees. The two
sides reached a settlement, but U.S. District JudgeJed Rakoff refused to accept it and set a
trial date for that matter.
In a Dec. 31 letter, the SEC asked the judge to piggyback new charges on top of that action.
BofA bought Merrill in a shotgun wedding, with Fed Chairman Ben Bernanke and former
Treasury Secretary Hank Paulson holding the 12-gauge, former BofA chief executive Ken
Lewis has maintained. As Merrill's losses became more evident in late 2008, as the deal
neared consummation, Lewis considered backing out, but said he was pressured by
Bernanke and Paulson to keep Merrill, for fear of another economy-killing Lehman-
like collapse.
BofA's non-disclosure of the mounting losses at Merrill prior to the shareholder vote on the
deal has cast a shadow on the merger. Lewis maintains he followed all SEC rules for
disclosure.
In a statement released Monday, BofA said: "We are disappointed that more than two
months after the court-imposed deadline to amend its complaint and in the absence of any
new information, the SEC now at the 11th hour is nevertheless trying to add new charges.
With a trial set to begin in approximately six weeks, this would materially hinder our ability to
mount a defense."
You can read the SEC's entire statement by clicking here.
The BofA-Merrill merger is working hard to replace the AOL-Time Warner deal as the worst
of the first decade of the 21st century.
-- Frank Ahrens
Follow me on Twitter at @theticker
By Frank Ahrens | January 11, 2010; 4:32 PM ET
11/7/2010 SEC broadens charges on Bank of Ame…

SEC broadens charges on Bank of America


By Zachary A. Goldfarb
Washington Post Staff Writer
Tuesday, January 12, 2010; A13

Federal regulators on Monday moved to expand charges against Bank of America


for allegedly lying to investors during the 2008 fall financial crisis, but once again
decided against charging the executives or lawyers who signed off on the
company's actions.

The Securities and Exchange Commission initially accused the bank of concealing
from investors plans to pay billions of dollars in bonuses to employees at Merrill
Lynch before shareholders were asked to approve a merger of the two firms.
Now, the SEC is claiming that Bank of America also withheld information about
mounting losses at Merrill.

The latest accusations come after a federal judge rejected a $33 million settlement
between the SEC and the bank last fall because it failed to hold accountable any of
the executives or lawyers who were responsible for key omissions in documents
submitted to shareholders ahead of a vote that ultimately approved the acquisition.

In declining to charge individuals, the SEC said investigators found no evidence that
bank executives and lawyers intended to mislead the public.

Although U.S. District Judge Jed S. Rakoff of the Southern District of New York
did not approve the SEC's request to add new charges to its earlier complaint, the
SEC plans to file a separate complaint against Bank of America with the new
claims.

Last year, Rakoff ordered the case to trial after rejecting the settlement. At the
time, he ridiculed the SEC's argument -- essentially repeated in Monday's filing --
that Bank of America simply acted carelessly in omitting important information from
the proxy statement with the terms of the deal, but that executives and lawyers did not mean to do wrong.

"If the SEC is right in this assertion," the judge wrote in an August order, "it would seem that all a corporate
officer who has produced a false proxy statement need offer by way of defense is that he or she relied on
counsel."

Bank of America said in a statement that it felt vindicated since no executives or lawyers face charges, and it said
the SEC's new claims were meritless.

"Bank of America's position continues to be that the company and its officers provided sufficient and appropriate
disclosure prior to the shareholder vote in December 2008," the statement read. "Prior to the vote, Merrill Lynch
had five straight quarters of multi-billion dollar losses."
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11/7/2010 SEC broadens charges on Bank of Ame…

According to the SEC's new claims, Bank of America knew by the time of the shareholder vote that Merrill
Lynch had lost $4.5 billion in October 2008 and that the company's finances were deteriorating.

The proposed new complaint would allege that the bank "erroneously and negligently concluded that no
disclosure concerning these extraordinary losses was required as shareholders were called upon to vote on the
proposed merger with Merrill Lynch," the agency said in a statement.

The SEC added, "The lack of any disclosure about the losses deprived shareholders of up-to-date information
that was essential to their ability to fairly evaluate whether to approve the merger."

The trial, scheduled to begin March 1, could shine new light on the financial, political and legal drama surrounding
the deal.

Bank of America hastily arranged to buy Merrill Lynch days after the collapse of Lehman Brothers threatened to
topple similar investment banks. In the ensuing months, Merrill Lynch's finances continued to suffer as the
financial crisis worsened. Despite reservations, Bank of America decided to pursue the deal under strong
pressure from top government officials, who argued that the transaction was central to protecting the financial
system from further shock.

Since then, a barrage of criticism from Capitol Hill and other quarters has been leveled at the companies'
executives, as well as federal officials such as former Treasury secretary Henry M. Paulson Jr. and Federal
Reserve Chairman Ben S. Bernanke, accusing them of hiding important details from the public to ensure the
deal's completion.

In addition, the SEC launched an investigation into the deal that culminated in the charges from last August. New
York Attorney General Andrew M. Cuomo has his own probe ongoing.

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11/7/2010 Judge criticizes, but approves, settleme…

Judge criticizes, but approves, settlement with


Bank of America
By Zachary A. Goldfarb
Tuesday, February 23, 2010; A13

A federal judge on Monday approved a $150 million settlement between the


Securities and Exchange Commission and Bank of America on narrow legal
grounds, but derided as "half-baked justice" the regulator's decision to settle with
the bank over allegations it lied to investors.

After rejecting a smaller settlement last year, U.S. District Judge Jed S. Rakoff of
the Southern District of New York said he considered the new agreement
"inadequate and misguided" because its penalties are "very modest." Bank of
America must pay the fine and agree to other changes designed to improve
oversight of the company by its board of directors.

Nevertheless, the judge said that under the law, it is still largely the prerogative of
the SEC, as the nation's chief enforcer of securities law, to determine the proper
regulatory sanctions to bring in the case. The new settlement, he said, is an
improvement on last year's $33 million proposal and is "better than nothing."

The case arose out of Bank of America's purchase of Wall Street investment firm
Merrill Lynch in the fall of 2008. The SEC alleged that in seeking shareholders'
approval for the deal, Bank of America failed to tell investors about mounting
financial losses at Merrill Lynch, as well as plans to pay billions of dollars in
bonuses to the firm's employees.

Rakoff's grudging approval of the settlement underscores lingering doubt over


whether the SEC went as far as it could in trying to determine whether individual
executives should be held accountable for the bank's alleged wrongdoing.

The SEC maintained that the bank erred in not making the proper disclosures, and
that executives and their counsel did not conspire to deceive investors. This view will be tested in coming months
as New York Attorney General Andrew Cuomo presses his own case, filed 2 1/2 weeks ago, against Bank of
America.

Going beyond what the SEC has alleged, Cuomo filed fraud charges against the bank and two of its former top
executives, chief executive Kenneth D. Lewis and chief financial officer Joe Price, saying the bank and the
executives worked to conceal information from shareholders. The bank and its former executives are contesting
the charges.

Even though the SEC's account of events and Cuomo's differ in key ways, Rakoff said it is not clear whose
version of the truth was accurate, based on the evidence the agency and the attorney general provided to the

washingtonpost.com/…/AR2010022202… 1/2
11/7/2010 Judge criticizes, but approves, settleme…
court.

For instance, Cuomo has alleged that Bank of America fired in December 2008 its top lawyer, Timothy J.
Mayopoulos, because of concerns he "knew too much" about Merrill Lynch's losses. The bank says
Mayopoulos was removed to make room for Brian Moynihan, who has since become the bank's chief executive.
The SEC concurs with the bank's account.

Rakoff said none of the evidence "directly contradicts" the bank's view in this matter, one of the reasons he cited
in approving the settlement despite the more serious allegations made by Cuomo.

The settlement is expected to be finalized on Thursday after the SEC and Bank of America complete a little more
legal paperwork. But it has been a tortuous path to this point for the bank and the agency.

In August, the SEC filed a 13-page complaint against Bank of America, alleging violations only related to
disclosure of bonuses, and the bank immediately agreed to a $33 million settlement. By the luck of the draw, the
case ended up in the hands of Rakoff, who has a reputation for refusing to rubber-stamp regulatory settlements.

Rakoff ridiculed the proposed deal, saying it left unanswered far too many questions and was a convenient way
for both the regulator and the bank to sweep details of this key episode in the history of the financial crisis under
the rug. He ordered the case to trial.

That was a setback for the SEC, which had been trying to show it could be an aggressive Wall Street regulator
after years in which it was perceived as taking a light touch.

Then the SEC added new charges and announced a new settlement with Bank of America, increasing the fine
and requiring that the bank agree to changes to how it runs its business. For example, the bank will have to hire
independent consultants to audit compensation and disclosure practices.

It also furnished the court with voluminous details of its investigation into the bank, providing more details of how
it arrived at its conclusion.

Rakoff called measures to improve oversight of the company by its board of directors "helpful," and said they
might help "to render less likely the kind of piecemeal and mincing approach to public disclosure."

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