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.