Ex-BofA Finance Chief Settles N.Y. Merrill-Purchase SuitChristie Smythe
Former Bank of America Corp. Chief Financial Officer Joe L. Price agreed to pay $7.5 million to settle the New York attorney general’s lawsuit over alleged misrepresentations to investors about the bank’s 2009 purchase of Merrill Lynch & Co.
The accord follows agreements last month by the state’s attorney general, Eric Schneiderman, with the Charlotte, North Carolina-based bank and its former chairman, Kenneth Lewis, in which they agreed to pay a combined $25 million.
Bank of America and the former executives were accused of failing to disclose mounting losses of billions of dollars at Merrill Lynch as it prepared to buy the brokerage firm at the peak of the financial crisis. The bank agreed in 2012 to pay $2.43 billion to settle a shareholder lawsuit over losses suffered by investors as a result of the acquisition.
“I’m pleased to close the final chapter in our litigation over Bank of America’s merger with Merrill, and I will continue to hold individuals -- as well as corporations -- accountable for their actions,” Schneiderman said today in a statement.
William Jeffress, a lawyer for Price, said in a phone interview that the former Bank of America executive wanted to “end the toll of litigation on himself, his family and his career.”
“He was the officer at Bank of America who first raised the question of whether Merrill’s losses should be disclosed,” Jeffress said. “He did no more than accept the advice of the bank’s inside and outside counsel.”
The bank is “required by law” to indemnify Price and pay the $7.5 million, Jeffress said.
Lawrence Grayson, a spokesman for Bank of America, declined to comment on Price’s settlement.
The state alleged in the case, filed by Schneiderman’s predecessor, New York Governor Andrew Cuomo, that Lewis and Price misled shareholders to win their approval of the $18.5 billion deal and then manipulated the federal government into contributing bailout funds.
Price agreed as part of the accord to not work as an officer or director of a public company for 18 months, according to the attorney general’s office. Price didn’t admit wrongdoing under the settlement.
Bank of America took a $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 Bank of America’s stability if the takeover proceeded.
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 in December 2008 to buy the brokerage, an acquisition that was completed the following month.
The case is The People v. Bank of America Corp., 450115/2010 New York Supreme Court, County of New York (Manhattan).