Monday’s developments in the Bank of America-Merrill Lynch bonus case were so interesting that we decided to take a second look. Specifically, we wanted to know two things: First, was it a smart move for BofA’s lawyers at Cleary Gottlieb Steen & Hamilton to hire — at $1,090 per hour
— Morton Pierce, chair of M&A at Dewey & LeBoeuf, and ask him to defend how BofA and Merrill disclosed the bonus payments in their merger agreement? And second, how close did BofA come to waiving attorney-client privilege in asserting — to the Securities and Exchange Commission — that the two banks relied completely on their outside counsel at Wachtell, Lipton, Rosen & Katz and Shearman & Sterling in drafting the relevant clauses in the merger agreement?

To recap: The SEC charged Bank of America this month with failing to adequately disclose that it would allow Merrill to pay $3.6 billion in employee bonuses even though Merrill would bring billions more in losses with it when the banks merged last September. But the SEC simultaneously agreed to drop those charges if BofA forked over $33 million in fines. Judge Jed Rakoff of U.S. District Court in Manhattan put the brakes on the settlement, saying it might be against the public interest. He wanted more information.

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