Investors are suing Bank of America, charging that the bank (and I use the term loosely) deceived investors over the terms of bonuses to Merrill Lynch executives prior to the vote to acquire the brokerage.

Well, it appears that much BoA’s defense appears to be that if its investors ignored what they said, and read the financial press, they would have known anyway, but the judge just shot down that argument:

Bank of America Corp. suffered a setback in its defense to civil claims that it misled investors after a judge ruled that it may not introduce at a trial testimony about media reports predicting it would pay bonuses.

The U.S. Securities and Exchange Commission sued the lender on Aug. 3 claiming it misled investors about bonus payments while buying Merrill Lynch & Co. Bank of America said in a November 2008 proxy statement that Merrill agreed not to pay year-end bonuses when the bank had already agreed to Merrill’s paying as much as $5.8 billion, the SEC claims. A trial is scheduled for March in New York.

As part of its defense, Bank of America has argued that shareholders already knew, as a result of media reports, that Merrill would likely pay billions of dollars in bonuses. U.S. District Judge Jed Rakoff in Manhattan today barred the bank from offering testimony about such reports because the proxy statement itself told shareholders to ignore them.

“In effect, the bank is arguing that, even though it expressly warned its shareholders to disregard the media, it can now defend itself by asserting that a reasonable shareholder would have disregarded these warnings and, by consulting the media, perceived that the bank’s alleged lies were immaterial,” Rakoff wrote in a six-page opinion. “Even a zealous advocate might perceive that such an argument hints at hypocrisy.”

(emphasis mine)

So your argument is that you were telling a baldfaced lie, and everyone knew that you were lying?

Well, good luck with that.

When your defense against fraud charges is that the newspapers had shown that they were lying sacks of s%$#, I think that you are missing this whole “how to win the case” thing.