Southern District of New York Judge Jed S. Rakoff took strong exception Monday to a proposed settlement in which Bank of America would pay a $33 million fine to the Securities and Exchange Commission for not disclosing that Merrill Lynch was authorized to pay more than $5 billion in discretionary bonuses before the two entities merged in 2008.
During a 90-minute hearing in a packed Manhattan federal courtroom, Rakoff told David Rosenfeld of the SEC and Lewis J. Liman of Cleary Gottlieb Steen & Hamilton, representing Bank of America, he had “serious misgivings” about a settlement that “lacked in transparency.” The judge repeatedly expressed concern that money that Bank of America received from the government through the Troubled Asset Relief Program was used, “as a practical matter,” to pay the bonuses.
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