Ohio Attorney General Richard Cordray said Monday that his office could soon seek "billions" from Bank of America Corp. and some of its executives, including Chief Executive Ken Lewis, over the company's handling of its merger with Merrill Lynch & Co. this year.
Cordray has filed suit on behalf of five pension funds, accusing the company and four executives, including Bank of America Chief Financial Officer Joe Price and Merrill's former chief executive, John Thain, with concealing widening losses at Merrill before a shareholder vote last December to approve the deal. The lawsuit also named Bank of America's chief accounting officer, Neil Cotty.
Shirley Norton, a Bank of America spokeswoman, said: "We are confident we disclosed all that was required and look forward to presenting our position to the court."
Cordray's announcement is the latest legal challenge to Bank of America and its executives over its purchase of Merrill Lynch during the depths of the financial crisis. New York Attorney General Andrew Cuomo, the Securities and Exchange Commission, a U.S. Treasury investigator and lawmakers in Congress have all said they are investigating the conduct of Bank of America executives in connection with the Merrill deal.
A federal judge recently rejected a proposed $33 million settlement between Bank of America and the SEC over $3.6 billion in bonuses the SEC said Bank of America inappropriately allowed to be paid to Merrill employees late last year. The judge said the settlement was too lenient on Bank of America executives.
In December, before Bank of America shareholders voted to approve the deal, losses at Merrill Lynch widened sharply. Merrill, under then-CEO Thain, nonetheless paid out $3.6 billion in yearend bonuses before the deal closed, and Thain has said that Bank of America approved the payments.
The Ohio lawsuit accuses executives at Bank of America and Merrill of breaking securities laws by concealing information from shareholders. Filed on behalf of pension funds in Ohio, Texas, Sweden and the Netherlands, the suit is an attempt by the funds to recoup losses they suffered when Bank of America's share price fell after its purchase of then-crumbling Merrill Lynch.