SEC Filing Takes a Dig at Wachtell by Quoting the Firm's Own Lawyers
The Securities and Exchange Commission has unearthed some old publications and statements by lawyers at Wachtell Lipton Rosen & Katz in an effort to prove the law firm was aware of the need to disclose bonuses to Merrill Lynch executives in a proxy statement by its client, Bank of America.
The bank failed to make the disclosure before its takeover of Merrill, leading to a proposed $33 million deal to settle SEC allegations that Bank of America misled investors about plans to pay bonuses. U.S. District Judge Jed Rakoff has refused to approve the settlement and asked for a better explanation why corporate executives and possibly lawyers aren’t in the SEC’s targets.
In response, the SEC filed papers yesterday implying that Wachtell lawyers were aware that companies were being required to disclose such information in proxy statements, the Am Law Daily reports.
Despite the apparent dig at Wachtell, the SEC goes on to defend the proposed settlement as fair and reasonable. The SEC says there is not enough factual information available to charge individuals or to sustain other corporate charges.
According to the Am Law Daily: “In this most recent filing, the SEC continued to dodge the question of who was responsible for the disclosure decision and refused to identify anyone at fault at BofA. But it had no problem heaping blame on Wachtell.”
The story says a fuller look at the firm’s publications shows that Wachtell was advising clients on how to avoid disclosure without running afoul of the law. The issue, according to the Business Insider, is whether the omitted information was material.
“We wouldn’t be too quick to say that Wachtell faces serious trouble over the advice it most likely gave Bank of America,” the Business Insider writes. “The bank has argued that the bonus and loss information weren’t material to the deal. If the bank is right, not disclosing the schedules didn’t contradict Wachtell’s paper, which only advised against excluding material information.”
Meanwhile, Bank of America lawyers defended their client on a different front, telling Attorney General Andrew Cuomo in a strongly worded letter that the bank was not trying to hide between attorney-client privilege, the New York Times reports.
Related coverage:
ABAJournal.com: “Judge in Merrill Bonus Case Asks: Should Lawyers Be Responsible?”
ABAJournal.com: “Why Did the Bank of America Fire Its GC After Merrill Merger Vote?”
ABAJournal.com: “N.Y. AG Calls Bank’s Privilege Claims ‘Indiscriminate,’ Seeks Waiver”
