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Local News Story
Civil fraud charges filed against BofA, Ken Lewis
CHARLOTTE, 02.04.2010
CHRIS MILLER, WBT NEWS
New York's attorney general today filed civil fraud charges against Bank of America and former CEO Ken Lewis.
The charges stemmed from the Charlotte-based bank's controversial 2009 acquisition of Merrill Lynch.
Attorney General Andrew Cuomo accused Lewis and former chief financial officer Joe Price of misleading investors ahead of their late 2008 vote in favor of the Merrill merger.
In a separate action, the Securities and Exchange Commission today annoucned a $150 million settlement with BofA over similar allegations dealing with the merger.
Cuomo alleged the bank executives kept investors in the dark about Merrill's worsening financial condition in the run-up to that shareholder vote.
Bank of America's actions were "egregious and reprehensible," Cuomo said.
"Bank of America, through its top management, engaged in a concerted effort to deceive shareholders and American taxpayers at large," Cuomo said in a statement.
"This was an arrogant scheme hatched by the bank's top executives who believed they could play by their own set of rules."
Cuomo described the BofA/Merrill merger as a prime example of what "led to the near collapse of our financial system."
A bank spokesman told the Associated Press the company was "regrettable" and "without merit."
The SEC settlement with BofA looked to address charges executives didn't properly disclose Merrill's losses and bonues it doled out to Merrill employees in the days leading up to the official merger.
Bank of America agreed to pay $150 million to shareholders to settle the SEC charges. The agreement still must be approved by U.S. District Judge Jed S. Rakoff.
In September, the bank and the government agreed to a $33 million settlement only to have Rakoff reject the agreement.
Rakoff called the first deal a breach of ``justice and morality'' and ordered the case to go to trial. Rakoff wrote that the $33 million settlement was ``done at the expense, not only of the shareholders, but also of the truth.''
A hearing about the new settlement is scheduled for Monday afternoon.
THE ASSOCIATED PRESS CONTRIBUTED TO THIS REPORT
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