Here Comes ANOTHER JUDGE!

It just keeps getting better and better!

NEW YORK (Reuters) – A federal judge ordered Bank of America to explain why it agreed to pay $33 million to settle a U.S. Securities and Exchange Commission lawsuit if it believed it properly disclosed bonuses it authorized for Merrill Lynch & Co employees.

A day after receiving arguments from both sides about the proposed settlement, U.S. District Judge Jed Rakoff questioned the bank’s willingness to settle, saying that if it was "to curry favor with the SEC or to avoid retaliation by the SEC, the court needs to know the specifics."

The judge, however, also questioned the SEC effort to end its civil case, suggesting it might be unreasonable to let off company executives and their lawyers without penalty.

Let’s dig into some specifics from the order itself:

"… Where shareholders have been victimized by the violative conduct, or by the resulting negative on the entity following its discovery, the Commission is expected to seek penalties from culpable INDIVIDUAL OFFENDERS acting for the corporation."

BINGO.  Yet as this fine was "agreed" to be paid by the very people injured, in that it is coming from the company coffers rather than officers directly, it is exactly identical to fining the victim of a robbery when assessing the penalty, and what’s worse, they didn’t get a vote on being fined!

"In its August 24th submission, the SEC repeatedly reconfirms its central assertion that "Bank of America’s [proxy] statement was materially false and misleading…"…… Yet the same submission asserts that the SEC, despite its 2006 policy quoted above, decided not to bring individual charges against culpable individual offenders because the company’s witnesses "stated that they relied entirely on counsel to decide what was or was not disclosed in the proxy statement"…..

This is puzzling.  If the responsible officers of the Bank of America, in sworn testimony to the SEC, all stated that "they relied entirely on counsel,", this would seem to be either a flat waiver of privilege or, if privilege is maintained, then entitled to no weight whatever, since the statement cannot be tested.

Heh, a Judge that actually applies logic!  I’m pleasantly surprised that we have a member of the bench who "gets it."

The Court goes on to say:

"It also leaves open the question of whether, if it was actually the lawyers who made the decisions that resulted in a false proxy statement, they should be held legally responsible."

Heh heh heh….. oh, that’s good.  You mean that the old shyster defense of "The Dog Ate my Homework" didn’t work on this Jurist? 

I’m doubly-impressed!

The bottom line is this: We now have two sitting Judges who seem to be rather tired of the game-playing and BS that has permeated our government’s so-called "regulators" and so-called "officials" in this economic mess.

It is simply astounding that this sort of common sense has to come out of The Judiciary.  I thought the cops brought bad guys in front of the Judiciary!  You mean the only place we can find a pair of handcuffs (and a firearm – probably a "Judge" revolver at that) is behind the bench itself?

These corrections and sanctions should have come from the regulators and Congress, but instead of them doing their jobs, as I have repeatedly outlined over the last two years, they have been too damn busy on their knees playing "Blue Dress Paint-By-Numbers Club" with those on Fraud Street who have been robbing America (with both hands, since they seem to be free) for the last DECADE.

We desperately need the Judiciary to act in this matter.  To do so we need state attorney generals to bring hundreds of these cases, because quite clearly, The SEC and The US Department of Justice have not and will not.

It is time for the damn gloves to come off.  Our economy cannot recover until the scam street games are stopped, the fraudsters are removed from the executive suites (and if necessary from Washington) and the underlying frauds – particularly including the games played with the so-called "value" of assets on the balance sheets of various firms are all flushed out.

If CONgress won’t do it then let’s start putting pressure on our State Attorneys General to get these cases in front of Judges and do it that way.