Kenneth D. Lewis, Bank of America‘s former chief executive, says that New York Attorney General Andrew Cuomo’s securities fraud allegations in connection with the bank’s merger with Merrill Lynch are without merit. Lewis is accused of purposely withholding information from the shareholders who approved Bank of America’s acquisition of Merrill.
In his filing with the state supreme court, Lewis claims that Cuomo’s securities lawsuit places blame “where it does not belong.” Lewis contends that all decisions he made regarding the acquisition were done in “good faith” and with the shareholders’ best interests in mind.
Cuomo’s securities fraud complaint charged BofA, Lewis, and ex-CFO Joe Price of concealing from shareholders the fact that Merrill brought with it billions of dollars in debt. The NY Attorney General contends that the information was withheld so that the shareholders would approve the merger between the two financial institutions. He also has accused the defendants of exaggerating the degree of Merrill’s losses so that federal help would be provided through the Troubled Asset Relief Program.
Price and BofA are also denying Cuomo’s allegations.
The SEC made similar allegations against BofA last year but did not charge any individuals. The SEC and the bank settled the securities charges for $150 million. United States District Judge Jed S. Rakoff, who had turned down the previous settlement agreement of $33 million between the two parties because he considered the amount too low and a breach of “justice and morality,” approved this one.
Related Web Resources:
Bank of America’s Ex-Chief Denies Fraud Charges, NY Times, August 20, 2010
BofA, executives deny Cuomo charges, Herald Online, August 20, 2010
Judge Rakoff “Reluctantly” Accepts Bank of America Settlement With SEC, Business Insider, February 22, 2010
Cuomo Sues Bank of America, Even as It Settles With S.E.C., The New York Times, February 4, 2010
Related Blog Stories:
Bank of America Merrill Lynch to Settle UIT Sales-Related FINRA Charges for $2.5 Million, StockbrokerFraudBlog, August 22, 2010
Bank of America To Settle SEC Charges Regarding Merrill Lynch Acquisition Proxy-Related Disclosures for $150 Million, StockbrokerFraudBlog, February 15, 2010