NEW YORK — Bank of America Corp.'s former general counsel was fired in 2008 to create an opening for Brian Moynihan, who later succeeded Kenneth D. Lewis as chief executive, the Securities and Exchange Commission said Wednesday.
In a court filing Wednesday, the SEC, citing Lewis, said Timothy Mayopoulos, the bank's former general counsel, wasn't terminated in December 2008 because of his job performance or his legal advice.
"Rather, Mayopoulos was terminated in an attempt by Lewis to avert the imminent departure of the bank's then-head of global corporate and investment banking, Brian Moynihan, by offering Moynihan the position occupied by Mayopoulos and upgrading the position to one that directly reported to the chief executive officer," the SEC said.
The court filing was in connection with a $150 million settlement between Bank of America and the SEC over the bank's disclosures before its acquisition of Merrill Lynch & Co.
Mayopoulos was terminated in December 2008, five days after shareholders approved the merger.
U.S. District Judge Jed S. Rakoff, who is overseeing the case, has questioned why the SEC didn't come to the same conclusions about Mayopoulos' termination as New York Attorney General Andrew Cuomo, who has filed a separate lawsuit in state court in Manhattan.
At a hearing earlier this month, Rakoff said that Cuomo's lawsuit draws the inference that Mayopoulos was terminated because he wanted to disclose widening losses at Merrill Lynch before the deal closed.
"Lewis's account is corroborated by the testimony of several other senior officers and directors of Bank of America as well as contemporaneous emails and other communications," the SEC said. "His account is not contradicted by any evidence. There is no evidence that Joe Price, Bank of America's then-chief financial officer who had consulted Mayopoulos on disclosure in November and December, had any knowledge of, or participation in, the decision to terminate Mayopoulos."
The settlement would resolve two lawsuits by the SEC--one over the bank's disclosures regarding billions of dollars in bonuses paid to Merrill Lynch employees shortly before the $50 billion merger closed in January 2009, and the other over its alleged failure to disclose mounting losses at Merrill before a 2008 shareholder vote on the merger. One of the SEC's two cases is set for trial on March 1.
The SEC has alleged the bank violated federal proxy laws by failing to disclose "extraordinary financial losses" at Merrill Lynch prior to a shareholder vote on Dec. 5, 2008.
The investment bank ultimately reported losses of $27.6 billion in 2008.
The regulator also has alleged that Bank of America told investors in its proxy that Merrill Lynch agreed it wouldn't pay bonuses or other compensation to executives before the takeover deal was closed without Bank of America's consent, but had already "contractually authorized" Merrill Lynch to pay up to $5.8 billion in bonuses.
Merrill Lynch ultimately paid $3.6 billion in bonuses shortly before the merger closed.