Warren Buffett“A public opinion poll is no substitute for thought.”
Adlin Sinclair“Success is a welcomed gift for the uninhibited mind.”
U.S. judge rejects SEC bid to expand BofA complaint (Reuters)
on Monday rejected the U.S. Securities and Exchange Commission's effort to expand its lawsuit accusing
.N) of misleading shareholders over bonuses paid by Merrill Lynch & Co.
Citing a “danger of confusion” to a jury,
U.S. District Judge Jed Rakoff
refused to allow the SEC to add allegations that the bank failed to disclose what it called “extraordinary” losses at Merrill before shareholders voted on December 5, 2008 on the companies' merger.
“I really worry that a jury, which is my highest concern, would be confused by that double focus,” Rakoff said near the end of an hour-long hearing. “The great beauty of the present complaint is it's very simple, very straightforward.”
Rakoff nevertheless said there appeared to be “no impediment” to the SEC pursuing its other charges in a separate complaint. The agency indicated it plans to do so.
,” SEC spokesman John Nester said.
Bob Stickler said the Charlotte, North Carolina-based bank was pleased with the ruling.
Rakoff's decision clears the way for the SEC case over the $3.6 billion in bonuses paid out by Merrill for 2008 to go to trial on March 1, a date he repeated “will not change.”
His ruling is the latest embarrassment in the case for the SEC, which is working to restore its image after missing Bernard Madoff's alleged $65 billion
.
, Rakoff rejected the SEC's proposed $33 million settlement with the largest U.S. bank by assets over the bonuses.
He said the settlement could not “remotely” be deemed fair, noting it did not require disclosures of names of individual executives and lawyers who approved the bonuses. The current SEC complaint also does not name individuals as defendants.
The SEC had attempted in its amended complaint to argue that Bank of America learned before the shareholder votes that Merrill had losses of $4.5 billion in October and billions of dollars more in November.
SEC lawyer Scott Black said it was not unusual for the SEC to take years to bring charges “in cases of magnitude such as this.”
Yet Bank of America objected, saying the SEC “inexcusably waited” until just over two months before trial to raise its new claims. It claimed that this delay reflected a lack of diligence and was prejudicial.
Merrill suffered a $15.8 billion loss in the fourth quarter of 2008, an amount that did not surface publicly until January 2009 after the merger had already closed.
This and the federal government's role in seeing the merger through, including an infusion of taxpayer money into Bank of America, triggered a series of investigations by Congress and others, including
.
Many of the top executives who put the merger together are no longer with the combined company.
was ousted last January, while
retired at the end of 2009.
closed up 15 cents at $16.93 on Monday on the
.
and Rachelle Younglai in Washington; editing by Tim Dobbyn, Bernard Orr and Andre Grenon )