So much for Bank of America's sweetheart settlement with the Securities and Exchange Commission. At a hearing yesterday, Judge Jed Rakoff declined to approve the deal that the bank struck with the SEC a few weeks ago, allowing it to pay a mere $33 million to settle charges that it had failed to disclose Merrill Lynch's plans to pay out billions of dollars in bonuses on the eve of their merger.
Describing the deal as "strangely askew"—and more than a little annoyed that neither side was willing to place assign blame on anyone for the blunder ("Was it some sort of ghost or a human being?" the judge asked)—Rakoff grilled execs and lawyers for more than 90 minutes before indicating that he'd need to take more time to come up make a ruling on the matter:
I would be less than candid if I didn't express my continued misgivings about this settlement at this stage... When this settlement first came to me, it seemed to me to be lacking, for lack of a better word, in transparency. I did not know much about the facts from the complaint. I did not know much, or really anything, about the basis for the settlement.
Rakoff said he'd make a final decision on the matter in September. In the meantime, Bank of America's lawyers get to worry about one of the countless other legal problems now facing the bank! To wit: The bank agreed today to pay $55 million to settle a class-action lawsuit that it mislead employees about its financial condition, causing the value of their retirement plans to drop.