The Deal Professor has some good commentary on the state of the SEC's case against BAC. The case is a mess. For some reason the SEC focused its initial efforts on the bonus issue when the real issue should have been the one relating to disclosure (or lack thereof) related to Merrill's mounting "extraordinary losses" between signing and the shareholder vote. Judge Rakoff tossed out a plea agreement in the summer and called it puzzling. Now, the SEC has gone back and tried unsuccessfully to amend its complaint to add the disclosure piece. While it can still pursue the disclosure claims, the SEC must now file a separate action.

I am starting to understand why Ken Lewis resigned. In his mind, he stepped up to the plate in the midst of a financial crisis and "did the right thing" by taking Merrill. Of course, it was good for BAC, but who can hold that against him? What did he get for his troubles? Lawsuits from the SEC, the NY AG, shareholders in DE and an open invitation to speak in front of Congressional committees.

On the other hand, does a financial crisis mean that one's disclosure obligations end? The same question is true for AIG. We're going to find out.

-bjmq

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