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Tuesday, May 21, 2024 | Back issues
Courthouse News Service Courthouse News Service

Judge OK’s BofA’s Plan |to Disclose Legal Advice

(CN) - A federal judge in Manhattan approved Bank of America's plan to show the SEC the legal advice it received before buying Merrill Lynch last year. The order stems from the SEC's claim that the bank approved billions of dollars in bonuses to Merrill Lynch executives while accepting a $45 billion taxpayer bailout.

The SEC and the bank had proposed a $33 million settlement, which was seen as an unusually light punishment for the $3.6 billion bonus fiasco. The SEC explained its willingness to settle for so little by claiming that most of the evidence it needed to prove its case was protected by the bank's attorney-client privilege.

After U.S. District Judge Jed S. Rakoff rejected the settlement as "worth than pointless," the bank agreed to waive this privilege for some of the documents.

Rakoff noted that the proposed protective order "is draped in legalese -- with the complete first sentence extending over two-and-a-quarter single-spaced pages and featuring no fewer than nine recitations of the word 'Whereas.'"

But Rakoff ultimately said the agreement "comported with" the federal rules of evidence.

"The Court wishes to make clear, however, that it interprets the proposed Protective Order as simply protecting Bank of America against any claim that the stipulated waiver ... implicitly effectuates a broader waiver; but the Protective Order in no way precludes any party in this or any other case from challenging on any other ground Bank of America's assertion of attorney-client privilege or work-product protection regarding any information," Rakoff wrote.

"With this understanding, the Court hereby approves the proposed Protective Order."

On Tuesday, the SEC said the order would help it investigate the controversial bonuses.

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