Kenneth Lewis, the former Bank of America Corp. (BAC) chief executive officer accused of recklessness involving losses at Merrill Lynch, lost his bid to have a securities claim dismissed from a shareholder lawsuit.
U.S. District Judge Kevin Castel in Manhattan today dismissed claims against Lewis over the bank’s disclosure of federal financial assistance, and another concerning shareholders’ right to sue over certain types of securities.
The judge refused to dismiss claims that the defendants, including Bank of America, Lewis and former Chief Financial Officer Joe L. Price, failed to disclose Merrill’s deteriorating financial condition in the fourth quarter of 2008.
“The complaint adequately alleges that, by virtue of his position within BofA and his awareness of Merrill’s losses, Lewis’s inaction on the disclosure issue raises a strong inference of recklessness,” Castel wrote in today’s opinion.
Congress held hearings in 2009 questioning bonuses paid to employees of Merrill, the brokerage acquired by the bank that year, even as the firm’s losses triggered a federal bailout for Bank of America.
Lawrence Grayson, a spokesman for Charlotte, North Carolina-based Bank of America, and Andrew J. Ceresney, a lawyer for Lewis, both said they’re reviewing the ruling and declined to comment further.
The case is In re Bank of America Corp. Securities, Derivative and ERISA Litigation, 09-mdl-2058, U.S. District Court, Southern District of New York (Manhattan).
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