Oct. 13 (Bloomberg) -- Bank of America Corp. will give regulators documents it tried to keep private about the Merrill Lynch & Co. takeover, refueling probes into why shareholders weren’t told about losses and bonuses at the brokerage.

The lender agreed to forego its right to keep discussions with its lawyers confidential, spokesmen for the Securities and Exchange Commission and the Charlotte, North-Carolina-based bank said today. “We don’t have anything to hide,” said the bank’s Larry Di Rita.

The information may persuade a federal judge to approve a settlement with the SEC over the bank’s decision to withhold information about Merrill’s fourth-quarter loss and plan to award $3.6 billion in bonuses before shareholders approved the takeover in December. The judge rejected a $33 million accord, saying the bank may have lied to investors, and he demanded to know more about the advice given by company lawyers.

“This is their maximum effort to see if they can reach a settlement without going to trial,” said John Coffee, a securities law professor at Columbia University. “They hope that with greater transparency they can get closer to a settlement.”

The SEC, Congress and New York Attorney General Andrew Cuomo are probing the timing of disclosures about the bonuses and Merrill’s quarterly loss, which exceeded $15 billion. Cuomo had said the bank’s refusal to cooperate hindered his probe, and he was considering charges against executives if the documents weren’t provided.

‘The Right Thing’

“Attorney-client privilege is an important business principle, but the pressure in multiple inquiries to provide additional insight convinced us it is appropriate to waive in this instance to get the issue behind us,” Di Rita said. “We know we did the right thing throughout the discussions and deliberations involving the acquisition of Merrill Lynch.”

Investigators have questioned whether Chief Executive Officer Kenneth D. Lewis, 62, deprived shareholders of information they needed before voting Dec. 5 to go ahead with the takeover. Lewis told regulators on Dec. 17 he might call off the deal as the financial system teetered and losses at the brokerage spiraled higher. Lewis, who said last month he’s resigning at year-end, told investigators he relied on the advice of lawyers about what needed to be disclosed.

Succession Impact

The documents may detail the role played by the bank’s lawyers as well as executives named as potential successors to Lewis. The Finger family, which owns more than 1 million shares of the bank and campaigned against Lewis at this year’s annual meeting, has opposed internal candidates including Brian Moynihan and Gregory Curl, saying they may be “tainted” by the Merrill acquisition.

The bank had blocked former General Counsel Timothy Mayopoulos and Chief Financial Officer Joe Price from answering questions, citing attorney-client privilege, according to a Sept. 8 letter sent by Cuomo to Lewis Liman, a Bank of America attorney.

“It’s a terrific victory for Cuomo to get the documents now, when this is fresh in the public’s mind, to see if there is anything actionable against the attorneys,” said James Cox, a securities law professor at Duke University Law School. Cox said the omissions were “material” ones that might have affected the outcome, and that the bank’s lawyers erred if they told Lewis he didn’t need to disclose the losses and bonuses.

“This move by Bank of America puts a lot of heat on the attorneys and the enforcement staff at the Securities and Exchange Commission,” Cox said.

New Bailout

Bank of America was represented in the Merrill merger by Wachtell, Lipton, Rosen & Katz, while Merrill was represented by Shearman & Sterling LLP, both based in New York, according to court records.

The Merrill acquisition was completed on Jan. 1 only after the U.S. pledged $20 billion in new bailout funds, bringing the total to $45 billion, and guarantees on Merrill Lynch assets, which weren’t disclosed until the middle of that month. Senior bank officials didn’t give “material non-public information” to shareholders at least four times in the fourth quarter, Cuomo’s office said in a Sept. 8 letter.

Bank of America will turn over documents regarding Merrill’s losses and its communications with the Federal Reserve Board, the U.S. Treasury Department, and other officials regarding federal aid provided in connection with its merger with Merrill Lynch.

Bank Reconsiders

“Bank of America has reconsidered its position with regard to the waiver of the attorney-client privilege,” Liman said in letter released by Cuomo. “Our intention is to provide you with information and documents that will permit you to understand the contemporaneous communications with counsel during the time period that the events were taking place.” The waiver may be in effect by Friday, he wrote.

Last month, U.S. District Judge Jed Rakoff in Manhattan rejected a proposed settlement between the SEC and the lender tied to the Merrill disclosures. Rakoff asked whether the bank had lied to shareholders and why executives haven’t been sued.

That case, in which the SEC alleged Bank of America issued a deceptive proxy statement that outlined the deal for shareholders, is scheduled for trial in March.

Rakoff must approve the new agreement, according to the SEC statement. A separate investigation is also being conducted by the House Oversight Committee, which had demanded a list of documents that might be relevant to the case.

Action Forestalled

Cuomo is unlikely to sue Lewis over Merrill Lynch bonuses this week as he gets documents about legal advice given prior to the Jan. 1 purchase of Merrill, a person familiar with the matter said.

“I’m not sure either Cuomo or Judge Rakoff will be happy with just greater transparency,” Coffee said. The officials may want to hold directors, officers or lawyers responsible based on the documents that Bank of America discloses, he said. “We have to know who said what,” Coffee said.

Bank of America has hired Paul Weiss Rifkind Wharton & Garrison LLP to represent the bank in the SEC lawsuit, the Cuomo investigation, Congressional probe and shareholder and derivative litigation, according to a source close to the litigation. The bank hired the law firm in a strategy change as it seeks to strike a more cooperative tone with regulators, the source said.

Liman, a partner at Cleary, Gottlieb, Steen & Hamilton, did not respond to a phone call and e-mail requesting comment. Cleary spokeswoman Amy Deschodt referred questions to Bank of America.

To contact the reporter on this story: David Mildenberg in Charlotte at dmildenberg@bloomberg.net Karen Gullo in San Francisco federal court at kgullo@bloomberg.net.

Last Updated: October 13, 2009 16:09 EDT