Judge questions SEC $150 million accord with BofA

A federal judge expressed skepticism about the US Securities and Exchange Commission's USD 150-million settlement with Bank of America Corp over the Merrill Lynch takeover, questioning whether the regulator was too tame in setting forth facts to help him decide.

US District Judge Jed Rakoff is considering whether to approve the accord, which would resolve two lawsuits by the SEC against the largest US bank over the Jan. 1, 2009 merger.

The hearing came four days after New York Attorney General Andrew Cuomo filed civil fraud charges against the bank, former Chief Executive Kenneth Lewis, and consumer and small business and card banking chief Joe Price over the takeover. Price was chief financial officer at the time of the merger.

Cuomo alleged that the defendants misled shareholders about Merrill's soaring losses ahead of a Dec. 5, 2008 shareholder vote on the merger, and also misled the federal government so that it could extract $20 billion of federal bailout money.

In a Monday hearing, Rakoff said the versions of facts set forth by the SEC and by Cuomo were "strikingly different."

He said he plans to further review the circumstances under which general counsel Timothy Mayopoulos left Bank of America, as well as the role of the bank's law firm Wachtell Lipton Rosen & Katz LLP in deciding what to tell shareholders.

Rakoff also said he had "some questions" about the monetary component of the settlement, while other portions to improve the bank's corporate governance and disclosure practices appeared "quite positive."

The dispute has already been embarrassing for the SEC and the Charlotte, North Carolina-based bank.

Rakoff had in September rejected a USD 33 million accord as too low, as unfair in that it would have forced shareholders to pay a fine, and defective because it failed to hold any individual executives, directors and lawyers responsible.