« previous | MUCK HOME | next »
Lawsuits: Lewis, B of A, Misled Shareholders On Merrill Deal
This is just the headache that beleaguered Bank of America CEO Ken Lewis needs...
It looks like B of A is facing legal woes as a result of its hastily arranged deal to buy Merrill Lynch last fall, and its subsequent statements about Merrill's finances.
The Wall Street Journal reports (sub. req.):
Five public pension funds are seeking lead status in a class-action suit against Bank of America Corp., alleging that the nation's largest bank by assets made "untrue statements" in the run-up to its purchase of Merrill Lynch & Co. and did not disclose material information to shareholders.The funds claim to have lost $274 million on their Bank of America investments between July 21, 2008 and Jan. 20, 2009.
Ohio Attorney General Richard Cordray said:
We believe that Bank of America executives had material information that raised serious reservations about the deal but they did not disclose this information to shareholders.
Merrill's massive fourth quarter losses ultimately forced B of A to accept bailout funds in January, to help it digest Merrill. B of A execs have said (sub. req.) it wasn't aware of those losses until shortly before it took formal control of Merrill. But Merrill has countered that B of A had full access to Merrill's books far earlier.
Several other lawsuits have recently been filed against B of A. We've had a chance to look at one, brought as a class action by current or former B of A employees.
It alleges that B of A management -- including Lewis, who is named as a defendant -- didn't divest empoyees' 401k plans of their B of A stock, despite evidence that the stock was likely to decline in value thanks to the Merrill purchase. It accuses Lewis et al., among other things, of "making misrepresentations and failing to disclose information necessary for employees to protect their retirement savings."
Josh
Zachary
How much you want to bet AGI insures BofA for Corporate Incompetence/Maleficence? God what a bottomless pit!
March 25, 2009 7:13 PM | Reply | Permalink
This is probably only the beginning. People have been wiped out by these idiots. There will be more lawsuits.
March 25, 2009 10:10 PM | Reply | Permalink
"People have been wiped out by these idiots. There will be more lawsuits."
So... after "We the Taxpayers" finish paying off those scoundrels who can now buy twice as much property as they could before this fiasco... can we just call the bailout money donations or added interest rates? After all, they have taken hundreds of billions of dollars, which means, for many of us, payments have just been added to our normal monthly statements to the banks... the LEAST our folks in Washington who once upon a time represented US should do is give us a tax break for our over the top generous contributions...
March 25, 2009 10:42 PM | Reply | Permalink
Ken Lewis is one of the prime poster villains in our economic meltdown. Full of arrogant hubris, he leveraged B of A's capital to make questionable purchases of other firms on the verge of collapse: countrywide(sub-prime lending), Merrill Lynch($15 billion 4th quarter loss, but awarding $3 billion in bonuses to their execs). He has diluted the share price of BofA which has wiped out the stock holders, especially its own employees retirement accounts. The Board should fire him so as to preserve what is left of the firm, even it is now technically insolvent.
March 26, 2009 1:56 AM | Reply | Permalink
Isn't this fraud or some kind of fiduciary responsiblity malfeasance?
or is this
Too big to fail and too big to put in jail?
March 26, 2009 9:56 AM | Reply | Permalink
"The (pension) funds claim to have lost $274 million on their Bank of America investments between July 21, 2008 and Jan. 20, 2009."
With the Billions of dollars of bailout money BofA received, they could repay these pension funds all their losses.
After all, they paid out over $3 Billion in bonuses to employes who helped get them into this financial mess in the first place.
March 26, 2009 10:22 AM | Reply | Permalink