NY sues BoA
(8 February 2010 – USA) The state of New York has begun legal action against Bank of America and its former bosses, accusing them of duping investors and taxpayers during the takeover of Merrill Lynch.
The defendants, the bank, former chief executive Kenneth Lewis and former chief financial officer Joseph Price, are accused of intentionally withholding details of the huge losses Merrill Lynch was suffering.
According to the lawsuit, the defendants withheld the full details of Merrill Lynch’s financial strife so that shareholders would approve the merger; it also accuses them of ‘manipulating’ the federal government by threatening to back out of the deal unless they received the US bailout fund.
Andrew Cuomo, the New York state attorney general, announced the lawsuit saying that Bank of America, through its top management, engaged in a concerted effort to deceive shareholders and American taxpayers at large. This was an arrogant scheme hatched by the bank's top executives who believed they could play by their own set of rules.
In the end, they committed an enormous fraud and American taxpayers have ended up paying billions for Bank of America's misdeeds, Mr Cuomo added.
Bank of America said the charges were regrettable and lacked merit.
A spokesman for the bank also said that the evidence demonstrates that Bank of America and its executives, including Ken Lewis and Joe Price, at all times acted in good faith and consistent with their legal and fiduciary obligations.
He added that the US financial watchdog the Securities and Exchange Commission (SEC) had access to the same evidence as New York state officials and had found no basis to bring charges.
According to the lawsuit, the defendants withheld the full details of Merrill Lynch’s financial strife so that shareholders would approve the merger; it also accuses them of ‘manipulating’ the federal government by threatening to back out of the deal unless they received the US bailout fund.
Andrew Cuomo, the New York state attorney general, announced the lawsuit saying that Bank of America, through its top management, engaged in a concerted effort to deceive shareholders and American taxpayers at large. This was an arrogant scheme hatched by the bank's top executives who believed they could play by their own set of rules.
In the end, they committed an enormous fraud and American taxpayers have ended up paying billions for Bank of America's misdeeds, Mr Cuomo added.
Bank of America said the charges were regrettable and lacked merit.
A spokesman for the bank also said that the evidence demonstrates that Bank of America and its executives, including Ken Lewis and Joe Price, at all times acted in good faith and consistent with their legal and fiduciary obligations.
He added that the US financial watchdog the Securities and Exchange Commission (SEC) had access to the same evidence as New York state officials and had found no basis to bring charges.
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