As Zero Hedge previously disclosed, when Judge Rakoff told the SEC to promptly reevaluate its Wall Street pandering ways, one of the notable highlights was his suggestion that the lawyers advising Bank of America themselves may "be held legally responsible" for the creation of the fraudulent proxy statement which blatantly misrepresented the reality over Merrill's bonuses. And the question then becomes: who were the lawyers representing Merrill? Why Bank Of America's darling law firm Wachtell Lipton, and specifically legendary partner Ed Herlihy. Quoting Forbes:
Wachtell's earnings have skyrocketed in recent years as the economy boomed. Its partners averaged profits of no less than $3 million every year since 2004, according to American Lawyer's annual surveys. Over that period, it's ranked highest among U.S. law firms in profits-per-partner every year but 2006, when it was ranked second highest. In 2007 that figure was just below $5 million. That year ended with Herlihy helping Bank of America seal its $4 billion takeover of doomed mortgage lender Countrywide Financial.
Wachtell is not the only prestigious law firm potentially in the hot seat. Lawyers at Shearman & Sterling (22nd in profits-per-partner among U.S. law firms last year, with $1.7 million) represented Merrill Lynch in the merger. A Shearman spokesperson declined to comment on the possibility the firm would itself be held liable for the inaccurate proxy and resulting penalty. Wachtell's spokesperson did not immediately respond to a request for comment on that issue.
As observent Zero Hedge readers will recall, Ed Herlihy was the very same person who in September was raining fire and brimstone all over the administration literally day after day, threatening systemic collapse unless such outright criminal behavior as shorting and trading in CDS was immediately reined in, and also lobbying for an immediate enforcement of the uptick rule:
As we did last time, we demand to know just whose perverted interests is Wachtell Lipton representing, especially now that disclosure of the partners' skyrocketing compensation has been made public? With the observation by Judge Rakoff that the law firm may have blatantly crossed the borders of legality with its "advice" to Bank Of America executives, this question has to be answered immediately. If Herlihy's skewed advice comes purely for the benefit of Wall Street, at seemingly any price, the much more salient question is who ends up footing the bill for these crony overtures that the law firm pretends are for the "greater good" (where have we heard this squid pro quo before?).
The bottom line is that either Bank of America's executive committee, or as the SEC claims, the lawyers advising it, were responsible for one of the most blatant public filing misrepresentations in history. A $33 million slap on the wrist which comes out of BAC's troulbed investors and by implication, taxpayers, is a ludicrous way to "punish" those responsible. The Attorney General must see through the smoke and mirrors of this scam and has to seek criminal punishment for whoever ends up being the responsible party in this "hot potato" blame game.