By: Matthew Arndt, CFA, CPA, CFP | August 6, 2009 | Investor Information, The Politicians, The Regulators, Wall Street Ethics

Everything appeared to be going as planned for Bank of America with its settlement to the SEC until a U.S. federal judge decided to put the brakes on. Bank of America was hoping it could sweep this “minor inconvenience” under the rug for a mere $33 million. In an attempt to unveil the truth, Judge Jed Rakoff  refused to approve Monday’s settlement between the U.S. Securities and Exchange Commission and Bank of America Corp. The settlement was related to the acquisition of Merrill Lynch and appears to be an attempt on the part of Bank of America executives to hide the truth about what they really knew leading up to the merger between Bank of America and Merrill Lynch.

Bank of America told investors before the merger that Merrill had agreed it would not award year-end bonuses, but it appears Bank of America had already authorized Merrill to pay up to $5.8 billion in bonuses of which Merrill ultimately paid $3.6 billion in bonuses.

Allegedly, in Bank of America company emails loss projections for Merrill increased by nearly $2 billion two days before the takeover was approved by unwitting shareholders. The bank’s executives, however, decided that the losses were not large enough to be disclosed publicly. Hey, what’s $2 billion among friends? This is just another flagrant example of Wall Street corruption.