Posted on 10 Sep 2009
Bank of America Corp. said allegations of wrongdoing by New York Attorney General Andrew Cuomo in the bank's handling of the Merrill Lynch & Co. takeover were "spurious," while rejecting claims that the bank is hiding behind its lawyers.
In a letter to Mr. Cuomo's office, Lewis Liman, an attorney representing the Charlotte, N.C., bank, wrote that "no one has sought to take unfair advantage of the assertion of the privilege by hiding information from your office or anyone else."
Mr. Liman also said bank officials made no "false or misleading statements" about the payment of bonuses to Merrill employees and that there is no law requiring Bank of America to disclose that the securities firm's losses were growing before the deal was completed Jan. 1.
The heated response by Bank of America sets up a showdown with Mr. Cuomo, who is investigating the bank's disclosures about the Merrill deal for potential securities-law violations. Mr. Cuomo is contemplating charges against Bank of America executives for allegedly misleading investors about Merrill's financial condition.
A spokesman for Mr. Cuomo said Wednesday that the bank's letter was "riddled with inaccuracies."
In a separate court filing Wednesday, Bank of America said there was "no basis" for any suggestion that Bank of America lied about compensation at Merrill. The filing came in response to a demand by U.S. District Judge Jed Rakoff for more information about how the bank and the SEC reached their proposed $33 million settlement.
Bank of America told the judge that it didn't invoke reliance on counsel as a defense while discussing the SEC's case and repeated prior assertions that a proxy statement "was neither false nor materially misleading" about the Merrill bonuses, since it was widely known through press reports and financial reports that the bonuses would be paid.
The SEC disagreed, saying in its own court filing Wednesday that Bank of America's claims "run counter to the fundamental principle that it is the responsibility of the issuer" to provide accurate proxy statements.
The agency has been criticized by Judge Rakoff for fining the bank and, essentially, its shareholders, instead of pursuing charges against bank officials. The SEC said the "absence of individual charges does not diminish the appropriateness of this disposition with Bank of America," adding that it is "consistent" with the SEC's policies on corporate penalties.
In its court filing, Bank of America said it "stands ready to litigate" if the settlement isn't approved.