Thursday, February 4, 2010

Lewis: BofA lawsuit is 'badly misguided'

Update | 1:32 p.m. Former BofA CFO Joe Price calls allegations "utterly false." His statement is below.

In response to the lawsuit filed today by New York Attorney General Andrew Cuomo against Bank of America, former CEO Ken Lewis and former CFO Joe Price, the following statement was issued by Mary Jo White of Debevoise & Plimpton, who is representing Lewis.

The decision by Mr. Cuomo to sue Bank of America, Mr. Lewis and other executives in connection with BofA's acquisition of Merrill Lynch is a badly misguided decision without support in the facts or the law. As the SEC correctly concluded recently based on the very same evidence,* there simply is no basis for any case against Mr. Lewis or any other individual.

There is not a shred of objective evidence to support the allegations by the Attorney General. Mr. Lewis and other BofA employees acted in good faith in the Merrill Lynch transaction, following the expert legal advice of counsel and in the best interests of BofA shareholders. The Merrill Lynch transaction - undertaken at a time of significant danger to our financial system - has also proven to be an unmitigated success for BofA shareholders. Mr. Lewis has been unfairly vilified by the political search for accountability for the financial meltdown.** This suit is not fair, it is without factual or legal basis, and we look forward to prevailing in a court where the facts and law do matter.


*In Litigation Release No. 21371 filed by the U.S. Securities and Exchange Commission (“SEC”) on January 11, 2010, the SEC noted the following: “According to the SEC's proposed complaint, Bank of America executives at various times discussed the firm's disclosure obligations with internal and external counsel. These executives are not alleged to have deliberately concealed information from counsel or otherwise acted with scienter or intent to mislead. Nor is any counsel alleged to have acted with scienter or intent to mislead. For these reasons, the SEC's proposed complaint does not seek charges against any individual officers, directors or attorneys. SEC staff has advised the Commission that, after a careful assessment of the evidence and all of the relevant circumstances, it has determined that charges against individuals for their roles in connection with proxy disclosure are not appropriate.”

** On December 9, 2009, while Mr. Lewis was still CEO and President of Bank of America, the Company sent the U.S. Treasury $45 billion, including accrued dividends, to repay the U.S. taxpayers' entire investment in the company as part of the Troubled Asset Relief Program (TARP).

Joe Price, who is now the bank’s head of consumer banking, issued the following statement through his attorney, Bill Jeffress Jr.

The allegation that Mr. Price deliberately caused Bank of America to withhold from shareholders information they were entitled to know is utterly false. In truth, he did exactly what a responsible regulator would want and expect from a chief financial officer. He raised with the bank’s counsel, and with management both at the bank and Merrill Lynch, a concern whether existing public disclosures were adequate in light of what he leamed about projected losses for the fourth quarter at Menill Lynch. He made available to counsel all information believed by him or by them to be relevant to the issue. He listened to counsel’s advice, found it to be convincing, and followed it.

The complaint filed by the New York Attomey General makes allegations that are flatly contrary to the evidence and contrary to the conclusions of the Securities and Exchange Commission based on the same evidence. The Attorney General has misrepresented facts; he has selectively referred to facts thought to support his theory, while ignoring facts that contradict his theory; and he has drawn conclusions that a fair-minded regulator could not responsibly draw. Mr. Price denies the charges against him and will vigorously defend the lawsuit.


Anonymous said...

This is a very legitimate counter-argument. Cuomo is one of the most corrupt in the legal system today, and this case is a waste of many taxpaper's dollars. Maybe he feels the +/- 10% the government just made off of its loans to BAC need to be used up in another example of wasteful spending.

Anonymous said...

Misguided? What a crock. Kudos to Mr. Cuomo for taking this action!

Anonymous said...

Mr. Cuomo is running for Governor of NY. He doesn't care about the legalities of this, he cares about votes right now and taking on a bank that is NOT based in NY that is currently unpopular will get him votes. He has no case. There is no damages to anyone. The shareholders benefited, the employees benefited, ML benefited by the mere fact they survived, and ultimately, the customers either benifited or were at least not harmed. The State of NY was not harmed by this. Ultimately, much of those bonus's that were paid, was spent in NY and was taxed by NY at a high rate, so they benifited.

Further, even if paying bonuses is the crime it has been made to be now adays, ML was an independent company at the time the bonuses were paid and Mr. Lewis and BofA couldn't stop it.

I find it amazing they didn't go after John Thain. But then again, he lives in NY.

Anonymous said...

I agree that this is nothing but political grandstanding by Cuomo against the only Major Bank that just happens to not be based in NY!

Where is his attention on the Wall Street banks?

He is running for Governor of New York on a crusade against the one bank that refuses to call NY home.

Anonymous said...

I have to agree. Cuomo is only doing this for political reasons and it is b---s--t! How about Citibank, Morgan Stanley or JP Chase???? Any of the other NY-based banks Mr Coumo?????? Hope you lose the governor run.

Anonymous said...

Grrreat...create more excuses to move HQ to NY so that anything reminiscent of Charlotte BofA dies. Thanks Cuomo!!!

Anonymous said...

why doesnt he look at his own corrupt government and how they handle business. Instead of costly lawsuits with no merit - he should be trying to fix how the government wates taxpayers dollars.

Anonymous said...

I don't think BofA really wants to move to Cuomo's backyard... as stated in another story, the NY AG has huge powers there and could mangle BofA to death.

and most stories are saying the SEC is a dog with no teeth... well, I think Cuomo is going to turn out to be a pit bull!!

Anonymous said...

The NY Gov is highly pizzed that it is now for certain that BOA wont be relocating to NYC to be corrupted like all the others and this is why he waited so late to file this.
It will be dismissed as frivolous like the bogus Citi suit against Wachovia.
Its a bluff.

Anonymous said...

Kudos to Cumo to standing up to Ken Lewis and BOFA. Lewis knew he was doing crooked things when he left and he knew he was doing in BOFA depositors. I have a friend who has her house financed through BOFA and does all of her banking with them. Her husband has been very ill for 3 years and most likely will die within a year of heart problems. So she is the sole support of her family. She has always made her house payments on time and BOFA refused to renegotiate her house payment. She is currently working one full time job and 2 part-time jobs and can barely put food on their table because of his medical bills. They did nothing for Christmas this year and felt fortunate to have a pot of vegetable soup for Christmas dinner. This is just one example of how BOFA has not helped its customers as it was told to do by the federal government. Yet, they have merrily gone right on giving outrageous bonuses. So, yes, Kudos to Mr. Cumo. I do not care what his political aspirations are. Unless people stand up to these gouging financial institutions and make THEM pay for a change, it will be business as usual and our economy will continue to spiral downward further than it already is. I read the other day where the Securities & Exchange has also fined BOFA so it is not just Mr. Cumo concerned about wrongdoing by BOFA

Anonymous said...

Cuomo is ridiculous. Charlotte needs to stand by Ken and Joe. I personally know Joe Price and he is a man of honor and integrity. The crock is Cuomo.

Anonymous said...

Anon 10:47am

Sorry to hear about their current plight but I have to ask: Is it the banks fault for their poor retirement planning/current situation? THEN WHY SHOULD THEY EAT THE COST? If they cant afford the home they live in then they should sell it. I dont think any other company is going to take a loss due to their poor planning. Have they asked the utility company for help or the local grocery store for free food? Banks are not the Federal gov't (not yet) they dont specialize in hand-outs.

Anonymous said...

Hard to think seeking the truth is wrong and Judge Rakoff is asking what are the facts ---if every one is innocent than the truth will prevail-it is easy for the SEC to want to just settle but the shareholders will suffer even if some get cents on the dollar as under the $150m settlement it is spread over hundreds of millions of shares.After the lawyers take their share and the resulting drop in the BofA stock price it will do more harm than good.The current share holders will pay the price even more
Would BofA shareholders have approved the ML merger if they had known billions of dollars in bonuses were going to be paid to ML executives for the worst performance in the history of ML ?

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