NEW YORK — The New York Attorney General’s office said today it filed civil charges against Bank of America and its former CEO Ken Lewis, saying the bank misled investors about Merrill Lynch before it acquired the Wall Street bank in early 2009.
Civil charges were also being filed against Joe Price, who was chief financial officer at the time of the deal and is now head of BofA’s consumer banking ision.
At the same time Attorney General Andrew Cuomo’s office was filing its civil charges, the Securities and Exchange Commission reached a settlement to resolve federal charges it brought against the bank over similar issues. It is the second time the SEC and Bank of America have tried to settle that case.
Bank of America has been accused of failing to properly disclose losses at Merrill and bonuses paid to investment bank employees before the deal closed. Cuomo called Bank of America’s actions “egregious and reprehensible” in deceiving shareholders and the federal government.
The bank, Lewis and Price are facing charges under New York’s Martin Act, a wide-ranging securities law that is aimed at fighting fraud. The charges by Cuomo’s office lay the blame for additional government bailouts and alleged deception on the top executives at the nation’s largest bank.
Cuomo’s use of the Martin Act could be problematic for Lewis and Price. Unlike federal securities law, the Martin Act doesn’t require proving any intent to defraud shareholders, said John C. Coffee, a Columbia Law School professor specializing in corporate governance and securities law.
“You merely have to show that these iniduals were responsible for materially false disclosures made to investors,” Coffee said. “It’s somewhat more threatening” than federal law.
It is unclear how big any potential fines would be if the bank or executives lose the case. Because …
Read the original article at Oregonlive
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