Corporate Governance

SEC v. BofA: Let the Litigation Begin

By J. Robert Brown

We called it (although, in fairness, we had a 50-50 chance).  The SEC plans to litigate the case against Bank of America in connection with the non-disclosure of the bonuses paid by Merrill Lynch.  And, from the statement issued about the matter, will consider adding defendants (read individuals) if the facts uncovered in discovery warrant it. 

• "[W]e will vigorously pursue our charges against Bank of America and take steps to prove our case in court," the SEC said in a statement. "We will use the additional discovery available in the litigation to further pursue the facts and determine whether to seek the court's permission to bring additional charges in this case." 

Its not such a big surprise.  To drop the case would be to concede that it was misguided to begin with, a reflection of government pressure rather than a case brought on the merits.  The only mystery is why the Commission didn't just take this position as soon as Bank of American professed innocence in pleadings filed before Judge Rakoff.  Once that happened, there could be no settlement.  At least now the facts of the matter will come to light as the discovery process moves along.

Full post as published by The Race to the Bottom on September 22, 2009 (boomark / email).