A federal judge on Tuesday ordered the U.S. Securities and Exchange Commission to do a better job of explaining why it did not pursue allegations that Bank of America Corp
U.S. District Judge Jed Rakoff also wants to know why the bank agreed to a $33 million statement with the SEC if it believed there was nothing false and misleading in the proxy statement. He said if the bank did so to curry favor with the SEC or to avoid retaliation by the SEC, the court needs to know the specifics.
Rakoff said it was puzzling that the regulator accepted statements by bank executives that they relied on their lawyers as to what disclosures were made in the proxy statement given to shareholders who voted on the merger.
He said it is at war with common sense for executives to rely on counsel and then not waive attorney-client privilege, saying the culpability of both the corporate officer and company counsel will remain beyond scrutiny.
Rakoff must sign off on the settlement over the bonuses, which would total $3.6 billion. He directed both parties to submit new papers by September 9.
The Case is SEC v. Bank of America Corp, U.S. District Court, Southern District of New York (Manhattan), No. 09-6829.
(Reporting by Jonathan Stempel; Additional reporting by Elinor Comlay, Joe Rauch and Rachelle Younglai; Editing by Steve Orlofsky)