Judge Rakoff Grudgingly Signs Off On BofA/SEC Deal.

[WSJ Law Blog]

Readers, brace yourselves: The BacMer Saga is drawing to a close.

Judge Jed Rakoff today signed off on the SEC’s $150 million settlement with Bank of America, stemming from allegations the bank misled investors about its 2009 merger with Merrill Lynch & Co. The SEC claimed the bank violated federal proxy laws by failing to disclose “extraordinary financial losses” at Merrill Lynch prior to a shareholder vote on the merger in late 2008.

Rakoff, as our loyal readers know, eviscerated the SEC’s initial $33 million settlement in September, which prompted BofA to sweeten the pot. Rakoff’s objections have centered on whether the settlement did enough to punish any BofA execs who were to blame for misleading investors. It’s not fair, the judge has said, to require shareholders to pay for misconduct committed by the bank’s top brass.

The extra money in the new and improved settlement did little to improve Rakoff’s mood, according to this piece from WSJ’s Chad Bray and this one from NYT.

Rakoff said today that if he were reviewing the merits of the merger “de novo,” he would reject it as inadequate and misguided.”

But, he added, “as both parties never hesitate to remind the court, the law requires the court to give substantial deference to the SEC as a regulatory body having primary responsibility for policing the securities markets.”

The judge did ask the parties to include several minor revisions to the deal, including giving the SEC a say in hiring an independent auditor who will assess whether the bank’s accounting controls and procedures are adequate.

“We’re very pleased that the settlement has been approved,” said Robert Stickler, a BofA spokesman.