New York court rejects settlement proposed by SEC and Bank of America

In an extraordinary judgment handed down September 14, 2009, a New York Federal Court denied approval of a $33 million settlement between the United States Securities and Exchange Commission ("SEC") and Bank of America Corporation.

When prosecutors and the accused reach a settlement, Courts rarely interfere by denying approval of the settlement.  Such settlements are “almost unreviewable.” But even after acknowledging that demanding standard, Judge Jed Rakoff of the United States District Court for the Southern District of New York disapproved of a proposed $33 million settlement of allegations by the SEC that Bank of America misled investors about $5.8 billion in bonus payments to executives of Merrill Lynch, when Bank of America acquired Merrill last year.