After departing as Bank of America’s chief executive in December 2009 Kenneth D. Lewis is back in the hot seat. Lewis has been sued in a civil suit by the state of New York for misleading investors about not disclosing details about the risks of acquiring Merrill Lynch.
America’s biggest bank by assets and deposits, its former CEO and Chief Financial Officer Joseph Price are being accused of manipulating shareholders, investors, and taxpayers about the takeover of Merrill Lynch according to an announcement by the New York Attorney General [NYAG] Andrew M. Cuomo, joined by Special Inspector General for the Troubled Asset Relief Program Neil Barofsky. Furthermore, it is alleged that once the merger was approved, Bank of America’s management duped the federal government into saving the deal with billions in taxpayer funds by falsely claiming that they would back out of the deal without bailout funds.
“This merger is a classic example of how the actions of our nation’s largest financial institutions led to the near-collapse of our financial system,” said the Cuomo, the state’s highest ranking law enforcement officer. “Bank of America, through its top management, engaged in a concerted effort to deceive shareholders and American taxpayers at large. This was an arrogant scheme hatched by the bank’s top executives who believed they could play by their own set of rules. In the end, they committed an enormous fraud and American taxpayers ended up paying billions for Bank of America’s misdeeds.”
After overseeing two bailouts himself, the former boss for the Bank of America is now considered one of the key culprits for the financial industry’s crisis. The timing of Lewis’ departure from Bank of America and subsequent retirement was tainted by the Merrill Lynch merger. Before the shareholder vote for Bank of America to buy Merrill Lynch the actual losses was in excess of $16 billion.
After the shareholders approval of the deal, Merrill’s actual losses had increased an extra $1.4 billion and neither amounts were divulged, which paints a deceptive ploy by to misguide the entire transaction. It seems even the former General Counsel of the bank Timothy Mayopoulos, was not “intentionally mislead about the size and nature of Merrill’s losses.” He was replaced by Brian Moynihan who was the head of Global Corporate Investment Bank Division.
“This was an arrogant scheme hatched by the bank’s top executives who believed they could play by their own set of rules. In the end, they committed an enormous fraud and American taxpayers ended up paying billions for Bank of America’s misdeeds,” said Cuomo.
After the Merrill bailout, Bank of America received $45 billion in government funds.
Bloomberg reported that Moynihan, who succeeded Lewis on Jan. 1, isn’t under investigation in Cuomo’s case and has been “candid” with the attorney general’s office, according to David Markowitz, Cuomo’s special deputy for investor protection. Moynihan was the bank’s general counsel in December 2008 when it negotiated with U.S. officials for $20 billion of bailout funds. Price has since been named head of the consumer unit at Bank of America.
Cuomo based his civil case on New York’s Martin Act, a securities law that permits civil and criminal penalties, and said the investigation was aided by Neil Barofsky, special inspector general for the Troubled Asset Relief Program.
In the bank’s defence they insist that, “The evidence demonstrates that Bank of America and its executives, including Ken Lewis and Joe Price, at all times acted in good faith and consistent with their legal and fiduciary obligations. In fact the [Securities and Exchange Commission] SEC had access to the same evidence as the NYAG and concluded that there was no basis to enter either a charge of fraud or to charge individuals. The company and these executives will vigorously defend ourselves.”
America’s biggest bank by assets and deposits, its former CEO and Chief Financial Officer Joseph Price are being accused of manipulating shareholders, investors, and taxpayers about the takeover of Merrill Lynch according to an announcement by the New York Attorney General [NYAG] Andrew M. Cuomo, joined by Special Inspector General for the Troubled Asset Relief Program Neil Barofsky. Furthermore, it is alleged that once the merger was approved, Bank of America’s management duped the federal government into saving the deal with billions in taxpayer funds by falsely claiming that they would back out of the deal without bailout funds.
“This merger is a classic example of how the actions of our nation’s largest financial institutions led to the near-collapse of our financial system,” said the Cuomo, the state’s highest ranking law enforcement officer. “Bank of America, through its top management, engaged in a concerted effort to deceive shareholders and American taxpayers at large. This was an arrogant scheme hatched by the bank’s top executives who believed they could play by their own set of rules. In the end, they committed an enormous fraud and American taxpayers ended up paying billions for Bank of America’s misdeeds.”
After overseeing two bailouts himself, the former boss for the Bank of America is now considered one of the key culprits for the financial industry’s crisis. The timing of Lewis’ departure from Bank of America and subsequent retirement was tainted by the Merrill Lynch merger. Before the shareholder vote for Bank of America to buy Merrill Lynch the actual losses was in excess of $16 billion.
After the shareholders approval of the deal, Merrill’s actual losses had increased an extra $1.4 billion and neither amounts were divulged, which paints a deceptive ploy by to misguide the entire transaction. It seems even the former General Counsel of the bank Timothy Mayopoulos, was not “intentionally mislead about the size and nature of Merrill’s losses.” He was replaced by Brian Moynihan who was the head of Global Corporate Investment Bank Division.
“This was an arrogant scheme hatched by the bank’s top executives who believed they could play by their own set of rules. In the end, they committed an enormous fraud and American taxpayers ended up paying billions for Bank of America’s misdeeds,” said Cuomo.
After the Merrill bailout, Bank of America received $45 billion in government funds.
Bloomberg reported that Moynihan, who succeeded Lewis on Jan. 1, isn’t under investigation in Cuomo’s case and has been “candid” with the attorney general’s office, according to David Markowitz, Cuomo’s special deputy for investor protection. Moynihan was the bank’s general counsel in December 2008 when it negotiated with U.S. officials for $20 billion of bailout funds. Price has since been named head of the consumer unit at Bank of America.
Cuomo based his civil case on New York’s Martin Act, a securities law that permits civil and criminal penalties, and said the investigation was aided by Neil Barofsky, special inspector general for the Troubled Asset Relief Program.
In the bank’s defence they insist that, “The evidence demonstrates that Bank of America and its executives, including Ken Lewis and Joe Price, at all times acted in good faith and consistent with their legal and fiduciary obligations. In fact the [Securities and Exchange Commission] SEC had access to the same evidence as the NYAG and concluded that there was no basis to enter either a charge of fraud or to charge individuals. The company and these executives will vigorously defend ourselves.”
