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February 9, 2010

  • BofA Under Fire, Pt.3
      Security Exchange gets in on the action.

    Previous...

    In August 2009, The Securities and Exchange Commission (SEC) settled a lawsuit against Bank of America (BofA) saying the credit card company had produced false and misleading statements to it stockholders pertaining to the Merrill Lynch merger. The credit card magnet agreed to pay $33 million to the SEC for non-disclosure of the terms of an agreement to pay nearly $5.8 billion in bonuses to Merrill Lynch employees. BofA withheld the information from stockholders when they were considering approval for the Merrill Lynch and BofA merger in December 2008. The nation's largest bank and credit card company announced the settlement on February 2, 2010, however, admitted no guilt in regards to the allegations. Although the announcement was made shortly thereafter the agreement was made, the SEC said the matter is not closed and its investigation will continue.

    Bank of America announced at the same time that it had also entered into an agreement with the Office of the Attorney General for the State of North Carolina to resolve all matters pertaining to an investigation by the NC Attorney General relating to the Merrill Lynch merger. However, the Merrill Lynch controversy has not ended. New York's Attorney General Andrew Cuomo has taken measures into his own hands with his filing against the credit card giant. In his suit, Cuomo not only accuses BofA of deception, but names the former CEO, Kenneth Lewis and Joseph Price, the President of the bank's Consumer, Small Business, and Credit Card Divisions specifically.

    Bank of America has at this point continued to support Price as displayed by his recent promotion to the worse performing U.S. credit card portfolios. The bank held the same public display of support for Kenneth Lewis while he served as the company's CEO and fought the battle of multiple stockholder suits all pertaining to the Merrill Lynch merger and bonuses paid. There's another question being asked; what's up with BofA's new leader, CEO and President Brian Moynihan. It's common knowledge that he too was involved with the Merrill Lynch merger and yet his name did not appear in the lawsuit.

    Continued...
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