Judge Jed Rakoff, our favorite crusading curmudgeon of the court, is at it again. And once again, he’s turned his ire to the backroom deal that Bank of America tried to cut with the Securities and Exchange Commission to settle a complaint about outsize bonuses paid at Merrill Lynch before BofA took it over last year. The $33 million settlement, Rakoff wrote in his decision, “does not comport with the most elementary notions of justice and morality.”
Rakoff — who had earlier warned that he wouldn’t let the proposed settlement go through — had plenty of choice words for both BofA and the SEC. The deal would have forced shareholders to foot the bill to settle a case involving $3.6 billion in bonuses awarded to top Merrill brass at the same time that the company was crying poverty and begging for a savior.
The judge said the settlement plan:
… 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. And all this is done at the expense, not only of the shareholders, but also of the truth.
Of course, this isn’t Rakoff’s first run-in with Bank of America over the Merrill bonuses. Just last month, scolded BofA lawyers who tried to cast bonuses averaging about $91,000 per employee as chump change. “I’m glad you think that $91,000 is not a lot of money,” the judge said. “I wish the average American was making $91,000.”
We can only hope that after Rakoff is done taking care of all of Wall Street’s excesses, he goes into broadcasting. TV and radio might be filled with angry old men, but we can’t imagine any of them using Oscar Wilde to slam the SEC, as Rakoff did today, when he compared the agency to a cynic who “knows the price of everything and the value of nothing.”
Previously: Judge Attacks Merrill Pre-Merger Bonuses