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Judge Slams 'Lying' BofA, Merrill Over $3.6B Bonuses

By Rob Quinn, Newser Staff

Posted Aug 11, 2009 1:50 AM CDT

(Newser) – The judge who has refused to sign off on Bank of America's settlement with the SEC over $3.6 billion in bonuses paid to Merrill Lynch delivered a stinging rebuke to both parties in a hearing yesterday, the New York Times reports. The firms "effectively lied to their shareholders" over the pre-merger bonuses, and the SEC's proposed $33 million settlement seems "strangely askew," said Judge Jed Rakoff.

The bonuses effectively came "from Uncle Sam" in light of the subsequent taxpayer-funded bailout, Rakoff said. "Do Wall Street people expect large bonuses in years when their company lost $27 billion?" he asked. He demanded to know more about the role chief executives played in approving the payouts. "Was there some sort of ghost that performed those actions?” he asked sarcastically. The judge ordered both sides to provide more information within two weeks.

[Images (3)]

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Merrill Lynch employees received $3.6 billion in bonuses even though the firm lost $27 billion last year. (AP Photo/Seth Wenig, file)

Then-Merrill Lynch Chairman and CEO John Thain, left, smiles as Bank of America Chairman and CEO Ken Lewis, speaks at a news conference in New York last year. (AP Photo/Craig Ruttle, file)

Judge Rakoff has demanded to know what role Bank of America CEO Ken Lewis, right, and former Merrill Lynch CEO John Thain played in Merrill's $3.6 billion bonuses, effectively "paid by Uncle Sam." (AP Photos/Bebeto Matthews)

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Do Wall Street people expect to be paid large bonuses in years when their company lost $27 billion? - Judge Jed Rakoff

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