Arbitration - BofA SEC Settlement - NY AG Lawsuit

Posted on August 17, 2009 by Rob Radcliff

A couple of quick hits on issues previously addressed:

Arbitration

BofA is one of a number of banks to drop mandatory arbitration provisions in their agreements with credit card holders. It follows JP Morgan Chase which stopped referring credit card disputes to arbitration last month.  The tide seems to be turning against arbitration in the consumer context.  We'll see if that sentiment has any effect in the employment arena.

BofA/SEC Bonus Settlement

Executive compensation at Merrill Lynch was covered at length in the media and this blog during the early part of 2009.  Merrill attempted to settle complaints raised by the SEC but a federal judge in New York put the brakes on the settlement and has yet to rule on whether he will approve the settlement.

Cuomo Sues Schwab over Auction Rate Securities

New York Attorney General Andrew Cuomo, who earlier in the year challenged Merrill bonuses, filed a lawsuit today against Charles Schwab over auction rate securities it sold to its customers. In a statement released today, Mr. Cuomo stated:

Charles Schwab owed its customers a duty to properly understand and make accurate representations concerning auction-rate securities. Today we commenced a lawsuit to remedy Schwab’s repeated breach of that duty.

There are numerous auction rate lawsuits pending throughout the country as investors, large and small, are unable to obtain funds invested in these securities.

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Merrill Lynch Bonuses - Cuomo Part II

Posted on February 11, 2009 by Rob Radcliff

Since my entry two weeks ago, New York Attorney General Andrew Cuomo chimed in again on Merrill Lynch 2008 bonuses in a letter (.pdf) to Congressman Barney Frank, Chairman of the House Committee on Financial Services.  The letter does not name names, but outlines numerous multi-million dollar payments to Merrill executives with the top 149 receiving approximately $858 million.  Stunning to say the least. 

 

 Cuomo attacks the timing and amount of the bonuses:

Rather, in a surprising fit of corporate irresponsibility, it appears that, instead of disclosing their bonus plans in a transparent way as requested by my Office, Merrill Lynch secretly moved up the planned date to allocate bonuses and then richly rewarded their failed executives. Merrill Lynch had never before awarded bonuses at such an early date and this timetable allowed Merrill to dole out huge bonuses ahead of their awful fourth quarter earnings announcement and before the planned takeover of Merrill by Bank of America.

Merrill Lynch's decision to secretly and prematurely award approximately $3.6 billion in bonuses, and Bank of America's apparent complicity in it, raise serious and disturbing questions.  By December 8, 2008, Merrill and presumably Bank of America must have been aware that the fourth quarter and yearly earnings results were disastrous.

 

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