New York Attorney General Andrew Cuomo filed securities fraud charges against former Bank of America CEO Kenneth Lewis and former Chief Financial Officer Joseph Price. The Attorney General claims that the two decided not to disclose the enormous losses at Merrill Lynch & Co. before getting shareholder approval to acquire the Wall Street firm.
The Complaint is full of newsbites:
“Ultimately, this was an enormous fraud on taxpayers who ended up paying billions for Bank of America’s misdeeds. Throughout this episode, the conduct of Bank of America, through its top management, was motivated by self-interest, greed, hubris, and a palpable sense that the normal rules of fair play did not apply to them. Bank of America’s management thought of itself as too big to play by the rules and, just as disturbingly, too big to tell the truth.” (#1)
From the Frontline Report, Breaking the Bank, it sounded like Bank of America was strong-armed into completing the merger with Merrill Lynch. Ken Lewis had the choice of going ahead with the merger or losing the bank. The complaint addresses this point
“The evidence further demonstrates that almost immediately upon reviewing the December 12 loss analysis, the Bank planned to seek taxpayer aid to save the merger, and to use the empty threat of a MAC claim as leverage with the government in negotiations.” (#21.)
Politicians have been looking for heads to roll. That bloodlust has gotten even frothier with year-end bankers’ bonuses getting readied for distribution. Lewis and Price have their heads in the civil lawsuit guillotine.
Sources:
- Complaint
New York v. Bank of America Corporation, Kenneth D. Lewis and Joseph L. Price - BofA, Executives Face Civil Charges by Cuomo by Dan Fitzpatrick and Kara Scannell for the Wall Street Journal
- Press Release from the Office of the Attorney General
New York v. Bank of America Corporation, Kenneth D. Lewis and Joseph L. Price