The Blog Of The Securities Industry Professional Association

The return on sanity?

A judge who finally gets it right

NEW YORK – A federal judge on Monday rejected a $33 million settlement between the Securities and Exchange Commission and Bank of America Corp. over bonuses paid by Merrill Lynch.

U.S. District Judge Jed Rakoff called the proposed consent judgment “inadequate.”

Rakoff wrote in an opinion that the $33 million settlement was a “trivial penalty for a false statement that materially infected a multi-billion-dollar merger.”

Rakoff set a Feb. 1 trial date for the case. The SEC had filed civil charges against Bank of America, saying it misled shareholders about bonus payments given to Merrill Lynch employees.

Last month, Rakoff ordered the SEC to explain why it didn’t pursue charges against specific executives at Bank of America over the accusations.

Charlotte, N.C.-based Bank of America agreed to acquire Merrill in a shotgun deal a year ago at the height of the credit crisis. It was later revealed that Merrill, with the knowledge of Bank of America executives, accelerated $3.6 billion in bonus payments before the deal was closed on Jan. 1..


Finally a person with dignity, honesty, and ethics and more important: COMMON SENSE!

As the SIPA wrote about almost 2 months ago, BOA and Merrill conspired to commit shareholder fraud to the tune of almost 6 billion dollars. Normally when FRAUD of this magnitude is committed people get handcuffed, tried and most likely spends years behind bars like Ivan Boesky and Michael Milken did. They have to shower with hardened criminals and learn how to make a knife out of old tooth brushes for protection! However in this day and age of pretend regulation, the only ones who get harsh punishment are small firm owners who failed to implement Policy and Procedures or who failed to report a stock trade within a few minutes of execution due to a down computer. When these offenses occur both FINRA and SEC alike are like Elliot Ness in the “Untouchables” refusing to accept anything less then a suspension, bar or a fine equal to 4 times the amount of money in question….However, a funny thing happens when the elite firms on Wall Street are involved…Suddenly, Fraud is more like a misdemeanor and corruption is kind of like a speeding ticket. No points no foul and a penalty that is less then 1% of the actual fraud damages. Maybe for the first time this injustice may be changing and quite frankly today indicates that President Obama may want to take a look at the “Change and Transparency” that he claims to have brought to Washington. The new commissioner of the SEC had an opportunity to make a statement about not taking the shenanigans of Wall Street anymore and instead…..Business as usual. This overturn by Judge Rakoff is a clear slap in the face of U.S. Regulators and we are hoping that more cases and more regulators are held accountable for the unholy alliance that has been created between the Elite on Wall Street and those that claim to regulate them. Remember this case as a prime example of exactly WHY Bernie Madoff and Sanford Williams got away with it all those years. The Obama administration keeps cautioning Wall Street, yet the person he appointed to clean up Wall Street continues to look the other way and treat fraud the way most people treat Speed

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September 14th, 2009


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