Friday, October 2, 2009

The SEC's Revolving Door at Work

"Two of the nation's most prominent law firms are facing scrutiny after a federal judge tossed a proposed government settlement with Bank of America Corp. [BofA] over bonuses paid to Merrill Lynch employees after their 2008 merger deal. ... While the judge's decision leaves [BofA] as a defendant facing a trial, he funneled some of his ire toward the lawyers involved. The SEC stated in court filings that lawyers 'made the relevant decisions concering the disclosure of the bonuses.' Judge Rakoff retorted: 'It that is the case, why are the pernalties not then sought from the lawyers?' Legal observers said there is a risk, though slight, that the firms could become defendants in the case or face a separate claim by the SEC that the lawyers violated professional ethics. ... The agency doesn't want to make lawyers fearful of giving advice. A spokesman for the SEC declined to comment. ... Another risk to Wachtell in any government action is that bank executives could choose to waive attorney-client privilege for their defense, potentially exposing Wachtell to further scrutiny and possible liability", my emphasis, Nathan Koppel, Ashby Jones and Amir Efrati at the WSJ, 16 September 2009, link:

How smart need one be be to conclude the lawyers were hired to lend the BofA their privilege? Is the SEC concerned about making "lawyers fearful of giving advice", or keeping the revolving door open for SEC staffers to join NY BigLaws?


Anonymous said...

Thank God for Jed Rakoff.

I hope he holds everyones feet to the fire.

VBPOutSourcing said...

This is nuts to think of the tossing blame and the pointing fingers. If the lawyers were to be blamed they would have been now, and no one expects these guys to be top notch on ethics, but they usually cover their own assets well.