Bank of America will not be able to call experts to testify about 2008 media reports on the likelihood that soon-to-be-acquired Merrill Lynch & Co. would be allowed to pay billions in bonuses to employees. Southern District Judge Jed S. Rakoff made that ruling yesterday in advance of a March 1 trial of allegations by the Securities and Exchange Commission that a proxy statement seeking approval of Bank of America’s purchase of Merrill falsely represented that Merrill was barred from paying the bonuses without Bank of America’s approval.
Bank of America and the SEC had settled in 2009, but Judge Rakoff refused to accept the settlement, forcing a trial—and Bank of America is arguing that shareholders already knew about the bonuses from media reports. The problem with that argument, Judge Rakoff said yesterday, was that it contradicts the words in the proxy statement.
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