In strikingly unenthusiastic fashion, federal Judge Jed Rakoff signed off on the Securities and Exchange Commission’s plan to fine Bank of America $150 million after failing to tell shareholders of about $16 billion in impending losses at Merrill Lynch.
“While better than nothing, this is half-baked justice at best,” wrote Mr. Rakoff in his ruling released Monday, a week before the case was scheduled to go to trial. “The amount of the fine appears paltry.”
The judge wrote in his report that his court was “shaking its head” and that, based solely on the merits, the settlement between the SEC and BofA should be rejected as “inadequate and misguided.” Yet he elected to go along with the SEC’s proposal, citing deference to the authority of regulators and adding that federal judges should be wary of the “power to impose their own preferences…”
The judge’s ruling also seems like a final slap at the reputation of the SEC. The federal agency was prepared to accept a $33 million fine from BofA last year until Mr. Rakoff rejected that settlement.
In the end, the judge signed off on the $150 million penalty—equal to about 3% of BofA’s pretax income last year—by citing a distinguished soothsayer and baseball player. In considering the tortured nature of the BofA case, the judge quoted Yogi Berra, who is said to have said: “I wish I had an answer to that because I’m getting tired of answering that question.”
In other words, everyone’s favorite cronies at the SEC are still taking care of their country club buddies. They’re just getting better at covering their tracks.