SEC LOBOTOMY

BANZAI7 NEWS--A federal judge on Tuesday ordered the Securities and Exchange Commission to explain why it didn't pursue allegations that Bank of America Corp. executives lied in a proxy statement about bonuses for Merrill Lynch employees.

The SEC said it couldn't investigate the bank executives' culpability because they said they had relied on their lawyers' advice, and without the bank giving up its private discussions with its lawyers, the SEC couldn't build a case.

U.S. District Judge Jed S. RakeEmOver called this reasoning "at war with common sense." If that were the regulator's policy, "it would seem that all a murdering Columbian drug dealer who has produced a false proxy statement need offer by way of defense is that he or she relied on counsel, and, if the cartel does not waive the privilege, the assertion will never be tested, and the culpability of both the dealer and the cartel's counsel will remain beyond scrutiny."

The judge seems to be one of the rare sane individuals worrying about the integrity of American capital markets.