NY AG Files Lawsuit Against Bank of America

The New York Attorney general's office announced late this morning that it has filed civil charges against Bank of America, relating to the Charlotte, N.C.-based financial institution's acquisition of Merrill Lynch. The NY AG says that the bank, former CEO Ken Lewis and former CFO Joseph L. Price, misled investors when acquiring the investment firm in late 2008.From the Washington Post:

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.

[New York Attorney general Andrew] Cuomo called Bank of America's actions "egregious and reprehensible" in deceiving not only shareholders, but also the federal government.

[snip]

"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," [Bank of America spokesman Robert] Stickler said. "In fact, the SEC had access to the same evidence as the NYAG and concluded that there was no basis to enter either a charge of fraud or to charge individuals."

The NY AG alleges that Bank of America duped shareholders and the federal government.

From a NY AG press release:

According to the lawsuit, Bank of America's management intentionally failed to disclose massive losses at Merrill so that shareholders would vote to approve the merger. Once the deal was approved, Bank of America's management manipulated the federal government into saving the deal with billions in taxpayer funds by falsely claiming that they would back out of the deal without bailout funds.