Monday, September 14, 2009
"It is not fair, first and foremost, because it does not comport with the most elementary notions of justice and morality, in that it proposes that the shareholders who were the victims of the Bank's alleged misconduct now pay the penalty for that misconduct." So says Judge Rakoff.
All this rethinking of M&A and corporate liability is making my dizzy. Judge Rakoff is apparently outraged that shareholders would be asked to pay for the misconduct of the corporation. He rejected BAC's settlement with the SEC today. In part because, in effect, innocent shareholders are being forced to pay the fine. One wonders how many shareholder class action lawsuits end up in front of Judge Rakoff. Presumably not many.