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Project Leniency: Rakoff Approves BofA Settlement

This week, Judge Jed Rakoff “reluctantly" approved the SEC/BofA settlement. For this stroke of grace, BofA should thank neither the judge, nor the attorneys who so ably represented it, but rather the arcane legal precepts that forced the court to give "substantial deference" to the SEC’s wishes. And, of course, they should thank the SEC for being a heck of a lot nicer to them than the judge thought was warranted.

The tone of Rakoff’s opinion is quietly, politely contemptuous of both the agency and the bank. Had the judging happened on Project Runway instead of in federal court, no doubt His Honor would have said exactly the same thing about the settlement agreement that Michael Kors said about a certain white dress on last week’s show - i.e., that it resembled "a tornado of toilet paper."

The judge makes it absolutely clear that, if not for the annoying legal constraints he had to deal with, things would have ended differently:

"So should the Court approve the proposed settlement as being fair, reasonable, adequate, and in the public interest? If the Court were deciding that question solely on the merits -- de novo, as the lawyers say - - the Court would reject the settlement as inadequate and misguided. But as both parties never hesitate to remind the Court, the law requires the Court to give substantial deference to the SEC..."

Anyhoo, Andrew Cuomo now gets his turn, minus the deference. Let the toilet paper roll.

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