January 19, 2010

Corp Fin Hires State Law Expert: Professor Larry Hamermesh

In an interesting move, Corp Fin has hired Professor Lawrence Hamermesh of Widener University Law School as an attorney fellow, who will serve thru mid-2011. Professor Hamermesh is a well-known Delaware law expert and is regularly rumored to be a candidate for the bench there. Not surprisingly, the Professor will be advising on areas where both federal and state law intersect. I imagine this has a lot to do with proxy access. A good hire by the SEC…

Here We Go Again: SEC Files Second Complaint against BofA

Last week, the SEC filed a second complaint in the US District Court – SDNY against Bank of America concerning an alleged lack of disclosure over extraordinary financial losses at Merrill Lynch prior to a shareholder vote to approve a merger between the two companies (here’s the SEC’s litigation release). Last year, the SEC filed a “lack of disclosure” complaint against BofA over a bonus plan related to its merger with Merrill Lynch that became headline news after Judge Rakoff had earlier refused to approve a settlement between BofA and the SEC.

A second complaint was filed by the SEC rather than amending the existing complaint because the court had denied the SEC’s motion to amend. Note that in the SEC’s litigation release announcing its intention to seek leave to amend, the SEC specifically noted that it does not allege that any individual bank executive or counsel acted with scienter and does not name as defendants, any individual. Trial is set for March 1st…

Dominic Jones notes that Judge Rakoff recently ruled that BofA cannot present expert testimony asserting that media reports should have alerted shareholders to the bonuses it planned to pay Merrill Lynch executives after the 2008 merger.

SEC Approves PCAOB’s “Engagement Quality” Standard

On Friday, the SEC approved the PCAOB’s Auditing Standard No. 7 regarding engagement quality review, after receiving nine comment letters when the standard was proposed last August. The standard is effective for engagement quality reviews of audits and interim reviews for fiscal years that began on or after December 15, 2009. Here is the PCAOB’s press release.

– Broc Romanek