It’s a new year, but so far, the same old (sad) song continues to play for Bank of America in the courtroom of Manhattan federal district court Judge Jed Rakoff, who’s overseeing the Securities and Exchange Commission’s suit against the beleaguered bank. On Monday, Rakoff ruled that BofA cannot present expert testimony asserting that media reports should have alerted shareholders to the billions it planned to pay Merrill Lynch executives after the 2008 merger.
In BofA’s answer to the SEC’s complaint, the bank’s lawyers from Cleary Gottlieb Steen & Hamilton and Paul, Weiss, Rifkind, Wharton & Garrison argued that numerous media outlets reported in advance of the BofA shareholder vote on the Merrill merger that Merrill execs were expected to receive billions in bonuses. That assertion echoed the bank’s filings with Rakoff last summer, when Cleary lawyers offered up affidavits from the likes of Stanford Law School professor Joseph Grundfest, who contended that such media reports were part of the total mix of information available to Bank of America shareholders. BofA’s point: Since shareholders should have known from media reports that bonuses would be paid, the bank’s decision not to mention those bonuses in pre-merger disclosure materials was not important.
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