Bank of America won't face damages claim over Merrill in N.Y. suit

Lawsuit over '09 acquisition seeks injunction barring individuals from the securities industry

Jan 18, 2014 @ 12:16 pm

Bank of America Corp. won't face damages claims related to its 2009 Merrill Lynch acquisition in a lawsuit filed by the New York Attorney General's Office.

New York Attorney General Eric Schneiderman is still pursuing the case without the damages claim, Matt Mittenthal, a spokesman for the office, said Friday. The lawsuit also seeks an injunction barring individuals from the securities industry and from serving on public boards.

The state has accused Charlotte, N.C.-based Bank of America (BAC) of misleading shareholders about losses at Merrill Lynch to win approval of the $18.5 billion deal and then manipulating the federal government into contributing bailout funds from the Treasury Department's Troubled Asset Relief Program to complete it.

The bank has faced regulatory probes, investor lawsuits and criticism from lawmakers over claims it didn't warn shareholders about spiraling losses at Merrill before they voted to buy the brokerage in January 2009.

The attorney general's office, under Andrew Cuomo, now New York's governor, sued Bank of America, former Chief Executive Officer Kenneth Lewis and former Chief Financial Officer Joseph Price in February 2010. In November of that year, Mr. Schneiderman was elected to replace Cuomo as attorney general.

Lawrence Grayson, a Bank of America spokesman, declined to comment on the New York attorney general's decision to no longer pursue damages.

TAXPAYER BAILOUT

Bank of America took its first $15 billion bailout by taxpayers in 2008 as Merrill took $10 billion. A second round of $20 billion came in January 2009 after Merrill's losses in its final quarter as an independent firm surpassed $15 billion, raising doubts about the company's stability if the takeover proceeded.

In 2012, Bank of America agreed to pay $2.43 billion to settle a shareholder class-action lawsuit over losses suffered by investors as a result of the Merrill Lynch acquisition.

Warren Buffett, the billionaire chairman of Berkshire Hathaway Inc. (BRK/A), has criticized Mr. Lewis for the Merrill acquisition, telling the Financial Crisis Inquiry Commission that Mr. Lewis paid a “crazy price.” The former CEO struck the deal the same day that Lehman Brothers Holdings Inc. filed for bankruptcy in 2008.

The case is The People v. Bank of America Corp., 450115/2010 New York Supreme Court, County of New York.

(Bloomberg News)

0
Comments

What do you think?

View comments

Recommended for you

Sponsored financial news

Featured video

INTV

Diversity & Inclusion Awards: 2018 nominations are open

Editor Fred Gabriel and special projects editor Liz Skinner discuss the nomination process for InvestmentNews' inaugural Diversity & Inclusion awards.

Latest news & opinion

Cetera reportedly exploring $1.5 billion sale

The company confirmed it's talking to investment bankers to 'explore how to best optimize [its] capital structure at lower costs.'

SEC Chairman Jay Clayton outlines goals for a new fiduciary standard

Rule should provide clarity on role of adviser, enhanced investor protection and regulatory coordination.

Advisers bemoan LPL's technology platform change

Those in a private LinkedIn chat room were sounding off about fears the independent broker-dealer will require a move to ClientWorks before it is fully ready.

Speculation mounts on whether others will follow UBS' latest move to prevent brokers from leaving

UBS brokers must sign a 12-month non-solicit agreement if they want their 2017 bonuses.

Maryland jumps into fiduciary fray with legislation requiring brokers to act in best interests of clients

Legislation requires brokers to act in the best interests of clients.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print