SEC: The BAC Shareholders were wronged: So Fine them!

http://www.nytimes.com/2009/09/18/business/18norris.html?pagewanted=2 The proposed settlement, the judge wrote, “is not fair, first and foremost, because it does not comport with the most elementary notions of justice and morality, in that it proposes the shareholders who were the victims of the bank’s alleged misconduct now pay the penalty for that misconduct.” In the real world, that is what... [more]

http://www.nytimes.com/2009/09/18/business/18norris.html?pagewanted=2 The proposed settlement, the judge wrote, “is not fair, first and foremost, because it does not comport with the most elementary notions of justice and morality, in that it proposes the shareholders who were the victims of the bank’s alleged misconduct now pay the penalty for that misconduct.” In the real world, that is what often happens in any case. Companies often indemnify officers and directors, particularly when fraud is not proved. Even if the commission did win a judgment against the bank’s chief executive, Kenneth D. Lewis, or some other executive, the chances are the company — and its shareholders — would end up footing the bill. ******************************************* Jed S. Rakoff refused to approve a settlement between the bank and the S.E.C. over a lack of disclosure in its merger proxy with Merrill Lynch last year. That proxy reported that Merrill could not pay bonuses without Bank of America’s approval, but failed to mention that such approval had been granted. Judge Rakoff was infuriated by many aspects of the case, including the bank’s unwillingness to part with information. “It is noteworthy,” he wrote, “that, in all the papers protesting its innocence, Bank of America never actually provides the court with the particularized facts that the court requested, such as precisely how the proxy statement was prepared, exactly who made the relevant decisions.” [less]