BofA Won’t Face Damages Claim Over Merrill in N.Y. Suit
New York Attorney General Eric Schneiderman is still pursuing the case without the damages claim, Matt Mittenthal, a spokesman for the office, said yesterday. The lawsuit also seeks an injunction barring individuals from the securities industry and from serving on public boards.
The state has accused Charlotte, North Carolina-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, 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.
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 Lewis for the Merrill acquisition, telling the Financial Crisis Inquiry Commission that 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.
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