HOORAY FOR THE SEC

Last week, shareholders and former shareholders received a “legal” document from the Securities and Exchange Commissions which document was a “Claim form to claim a portion of a $150 million settlement from the Bank of America. The settlement arose out of the Bank of America failure to disclose certain information to shareholders involving the merger with Merrill Lynch.

There is absolutely no question that the Bank was guilty of ailing to disclose and that shareholders were “injured” by this failure. However, the Bank is an institution and doesn’t make decisions. The decisions are made by the bank executives and board of directors. The SEC, in fining the Bank of America $150 million received those monies from funds that would otherwise be available to the bank for the benefit of shareholders either through investment in improving earnings or distribution in the form of a dividend. So, in effect, the shareholders paid the fine and will get their own money back. That doesn’t seem like an equitable deal when the fine was supposedly a punishment for wrongdoing.

If the $150 million had to be paid by Ken Lewis, then CEO and his senior executives who participated in the decision or the Board of Directors who approved the proxy material, then a “punishment” of he real guilty parties would have been meted out. But, the “bad guys” (those who decided not to disclose) are not punished and the “good guys” (the shareholders) are the ones punished by paying the fine and, albeit getting it back in the settlement, are the ones “punished”.

Ken Lewis and his “team” destroyed the Bank of America for the shareholders by their idiotic acquisition of Countrywide and merger with Merrill Lynch. Ken Lewis and his “team” walked away with millions in bonuses and salaries over the years leading to his ouster. The SEC should have gone after that money and, hopefully other lawsuits will result in punishing Ken Lewis and his team for their complete mis management of an otherwise fabulous institution. In the meantime, the SEC should not earn any kudos for their manner of “punishing” the Bank.

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