September 16, 2009 – 2:35 pm

Kangaroo_justice

Someone had better get word to Judge Jed Rakoff fast because he screwed up yesterday when he refused to go along with a cozy little settlement that had been worked out between Bank of America and the Securities and Exchange Commission. That sweet deal was a cover up in which no one admitted to any wrong because no one had even been accused of wrong doing. This is par for the elite, but of course the judge had not been so informed, so he made the perfectly awful decision not to go along, because it wasn’t fair. What?

And what does fairness — or as Rakoff defined it, “elementary notions of justice and morality” — have to do with securities law? Hasn’t he learned that securities law is supposed to be about the triumph of form over substance, about generating endless paperwork for lawyers while giving shareholders the illusion of knowing what management is up to?

And can you believe the total lack of judicial decorum in declaring, in simple English, that the largest bank in the America had “lied” to its shareholders? Any first-year law student knows that what he really meant was that there was “a failure to disclose material information in accordance with SEC Rule 10(b)-5.”

Bank of America, of course, doesn’t see it that way at all. Just because it told its shareholders that, in connection with its purchase of the failing brokerage Merrill Lynch, no bonuses would be paid to Merrill directors, officers and employees without its written consent, that didn’t really mean there would be no bonuses. After all, the proxy also had a passing reference to the possibility of an exception to this statement, which could be found in Section 5.2 of something called the Company Disclosure Schedule. All a diligent shareholder had to do was read Section 5.2 to learn that, in fact, Bank of America had already approved $5.8 billion worth of Merrill bonuses. Then again, getting hold of the aforementioned Disclosure Schedule would have been quite a challenge, because, according to common corporate practice, the schedule was never actually disclosed.

The nerve! And look at what you’ve done now, judge! By not cooperating with the “business as usual” crowd, you now threaten to knock the entire Bank of America board off their fat asses and into the witness seat, just because Andrew Cuomo decided to do the Securities and Exchange Commission’s job for them.

Bank of America’s board of directors will be hauled into the New York Attorney General’s office to explain what happened as the bank struggled to close its acquisition of Merrill Lynch.
On Wednesday, Andrew Cuomo subpoenaed five directors, according to a source familiar with the investigation. It was the first in a wave of subpoenas that his office will issue, eventually to cover all 15 Bank of America ( BAC – news – people ) directors on the board at the time of the January merger. Three other directors as of the time of the March proxy came from the Merrill Lynch side of the company.

Bank of America’s board of directors will be hauled into the New York Attorney General’s office to explain what happened as the bank struggled to close its acquisition of Merrill Lynch.

On Wednesday, Andrew Cuomo subpoenaed five directors, according to a source familiar with the investigation. It was the first in a wave of subpoenas that his office will issue, eventually to cover all 15 Bank of America ( BAC – news – people ) directors on the board at the time of the January merger. Three other directors as of the time of the March proxy came from the Merrill Lynch side of the company.

Cuomo, along with the House Oversight Committee and the Securities and Exchange Commission, has been probing the series of events that transpired in late November and through December, as Bank of America was trying to close the $50 billion purchase. The investigations are looking at what executives of the bank knew and when, what disclosures were made or not made to shareholders and why, and what was communicated to the board.

But you already know about that Andy, what are you,..? Oh, I get it.  Make a lot of noise, raise a lot of dust, drag it out and drag it on until your elected, then toss it out to the next New York State Attorney General to vuck up.

And so it was, the relatively strong was coerced to buy the pathetically weak.

I suspect Lewis he will be forced out as CEO whether he is indicted or not. Certainly he deserves to go. The more serious issue is the appearance of coercion by Paulson and Bernanke.

Please note that Cuomo’s letter states “In an interview with this Office, Secretary Paulson largely corroborated Lewis’s account. “

As far as I am concerned, Paulson just pleaded guilty. I do not care what Paulson’s reasons were, no one is above the law.

Let the criminal indictments begin: Paulson, Bernanke, and Lewis.

By now, Andy, if you’re not going to indict with all that, then you’re just not going to indict.

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