Securities And Exchange Commission v. Bank Of America Corporation

653 F. Supp. 2d 507 (2009)

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Nature of the Case

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Facts

P alleges that D materially lied to its shareholders in the proxy statement of November 3, 2008, that solicited the shareholders' approval of the $50 billion acquisition of Merrill Lynch & Co. (Merrill). D 'represented that Merrill had agreed not to pay year-end performance bonuses or other discretionary incentive compensation to its executives prior to the closing of the merger without D's consent. The exact opposite was true. D had already agreed that Merrill could pay up to $5.8 billion -- nearly 12% of the total consideration to be exchanged in the merger -- in discretionary year-end and other bonuses to Merrill executives for 2008. The very same day these very serious allegations were filed, the parties sought the Court's approval of a proposed final Consent Judgment by which D, without admitting or denying the accusations, would be enjoined from making future false statements in proxy solicitations and would pay a fine of $33 million. The reality of the merger was that Merrill was bankrupt. The further reality was that D's management decided that D's shareholders should pay over to Merrill's managers who drove the company into bankruptcy $5.8 billion of D's money. In settlement, P thought that $33 million was proper settlement for such a 'small' lie. Of course, let’s not let a little detail that the $33 million fine was also being paid for by D’s shareholders. The court made the wise decision and heard oral argument on August 10, 2009, and received extensive written submissions on August 24, 2009, and September 9, 2009.