Bank of America's former chief executive officer Kenneth Lewis and its former chief financial officer Joe Price have been charged with fraud in relation to the firm's buyout of Merrill Lynch in 2008.
The civil lawsuit against the pair was launched by New York attorney general Andrew Cuomo and alleges that the duo deliberately misled shareholders about the size of Merrill Lynch losses before a vote on whether a takeover should go ahead was made.
It is also said that Mr Lewis and Mr Price failed to disclose that Merrill staff were going to receive bonuses totaling more than $3.5 billion, despite the company losing $15.8 billion in the fourth quarter of 2008.
Following the takeover, Bank of America then "manipulated" federal regulators into giving it billions of dollars worth of bailout funding, with Mr Lewis and Mr Price using "an empty threat to terminate the merger" to get their way, reports Bloomberg.
"Throughout this episode, the conduct of Bank of America, through its top management, was motivated by self-interest, greed, hubris and a palpable sense that the normal rules of fair play did not apply to them," said the filing.
News of the lawsuit is a blow to the Wall Street firm, which has recently installed Brian Moynihan as its new chief executive officer.
He replaced Mr Lewis in January but Mr Price remains at Bank of America and is currently the head of consumer, small business and card banking.
The charges against the pair have been denied, with Mr Lewis' lawyer Mary Jo White labeling the allegations as "badly misguided".
"There is not a shred of objective evidence to support the allegations," she said.
Last month, Bank of America recorded a net loss of $5.2 billion for the final quarter of 2009 – mainly related to the recent repayment of its bailout debts.
No comments:
Post a Comment