"Federal judge Jed. S. Rakoff fired a new shot in his challenge to a $33 million settlement by [BofA] over investor disclosures, saying the government's justification for letting individual executives off the hook is 'at war with common sense.' ... The SEC has said it couldn't investigate individual executives' culpability because they said they relied on lawyers' advice. Unless the executives waived their right to keep the advice private, the SEC said it would face 'substantial obstacles" to building a case. ... If that were the regulator's policy, 'it would seem that all a corporate officer who has produced a false proxy statement need offer by way of defense is that he or she relied on counsel.' He said if the company insists on attorney-client privilege, there is no way to test the assertion and determine whether executives or their lawyers were culpable", my emphasis, Jess Bravin at the WSJ, 26 August 2009, link: http://online.wsj.com/article/SB125123100930658077.html.
"A federal judge told the [SEC] on Tuesday to give a better explanation of why it had agreed to a settlement with [BofA] over bonus disclosures without pressing the bank's executives harder. ... Responding swiftly, the judge questioned why the SEC did not insist that [BofA] waive attorney-client privilege before striking a $33 million settlement. He also questioned whether bank executives--or the outside lawyers--should be charged in the case. ... 'It is extremely unsual for a judge to want to look under the bonnet,' said George B. Newhouse Jr., a former prosecutor and now a partner at Brown, White & Newhouse, a law firm in Los Angeles", Louise Story at the NYT, 26 August 2009, link: http://www.nytimes.com/2009/08/26/business/26bank.html.
The Fed and Treasury knew before the BofA-Merrill merger. Amazing.