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MarketScreener Homepage  >  Equities  >  Nyse  >  Bank of America Corporation    BAC

BANK OF AMERICA CORPORATION

(BAC)
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Delayed Quote. Delayed Nyse - 08/13 04:10:00 pm
26.35 USD   -1.42%
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Exclusive: Bank of America, ex-CEO Lewis settle NY lawsuit over Merrill

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03/26/2014 | 03:09pm EDT
File image of Bank of America Corp, former Chief Executive Kenneth Lewis speaking during the Wall Street Journal Deals and Dealmakers conference, in New York

NEW YORK (Reuters) - Kenneth Lewis, who turned Bank of America Corp into the nation's largest bank but also saddled it with enormous losses tied to mortgages, has settled a lawsuit accusing him of deceiving investors about one of his biggest acquisitions: Merrill Lynch & Co.

Lewis, the bank's chief executive from 2001 to 2009, will pay $10 million to resolve claims by New York Attorney General Eric Schneiderman that he misled shareholders and the government in order to complete the merger, which closed on January 1, 2009, according to a copy of the agreement obtained by Reuters.

New York accused Lewis of concealing Merrill's mounting losses from Bank of America shareholders prior to a December 5, 2008 vote on the merger, and manipulating the U.S. government into providing an extra $20 billion bailout by falsely claiming that he would back out of the merger without the money.

As part of the agreement, Lewis, 66, will also be barred for three years from serving as an officer or director of a public company. It is unclear whether insurance will cover his payment.

Bank of America will pay $15 million to resolve its portion of the lawsuit by Schneiderman, who inherited the case from his predecessor, Andrew Cuomo, now New York's governor. The bank also will adopt reforms, such as creating a special committee to review large acquisitions, according to a separate settlement agreement obtained by Reuters.

Both payments would cover the costs of Schneiderman's investigation, and neither Lewis nor Bank of America are admitting wrongdoing or paying damages.

Nonetheless, the settlement with Lewis, who has kept a low public profile since leaving Bank of America, would mark one of the rare times that an executive at a major U.S. bank has been held legally responsible in a case alleging wrongful conduct linked to the 2008 global financial crisis.

"Individuals - not just corporations - should be held accountable for their actions," Schneiderman said in a statement confirming the settlements.

A third defendant, former Bank of America chief financial officer Joe Price, has yet to settle, Schneiderman's office said.

RED INK

Bank of America agreed to buy Merrill Lynch for an estimated $50 billion on September 15, 2008, the day before Lehman Brothers Holdings Inc went bankrupt, in a hurried merger that won Lewis praise at the time and likely prevented Merrill's demise.

Losses at Merrill, however, mounted ahead of a December 5, 2008 vote by Bank of America shareholders on the merger, ultimately reaching $15.84 billion in the fourth quarter of that year.

Despite the red ink, Merrill paid out $3.62 billion of bonuses, and New York claimed that Bank of America misled shareholders about the timing and criteria for the payouts.

The merger closed six months after Lewis had bought the mortgage lender Countrywide Financial Corp. The two purchases put great stress on Bank of America's balance sheet, and led to an extra $20 billion federal bailout in mid-January, by which time Merrill's losses also became known. The bank had already taken $25 billion from the government. The $45 billion has since been repaid.

MARTIN ACT

Cuomo had sued Lewis, Price and Bank of America under the Martin Act, the state's powerful securities fraud statute.

The lawsuit came after the U.S. Securities and Exchange Commission had also sued Bank of America over its disclosures about Merrill's losses and bonuses.

That case eventually settled for $150 million, an accord that U.S. District Judge Jed Rakoff in Manhattan approved reluctantly because it did not require Bank of America to address whether it did anything wrong.

A separate $2.43 billion shareholder class action settlement won final approval last year, and was a factor in Schneiderman's decision in January to drop his damages claim.

New York's highest court ruled in 2008 that the attorney general cannot pursue damages for shareholders who have settled a class action, even if they are not made whole.

Bank of America is now the second-largest U.S. bank by assets, having been surpassed by JPMorgan Chase & Co.

The case is New York v. Bank of America Corp et al, New York State Supreme Court, New York County, No. 450115/2010.

(Reporting by Karen Freifeld; additional reporting by Jonathan Stempel; Editing by Bernard Orr)

By Karen Freifeld

Stocks treated in this article : JPMorgan Chase & Co., Bank of America Corp
Stocks mentioned in the article
ChangeLast1st jan.
BANK OF AMERICA CORPORATION -1.42% 26.35 Delayed Quote.-25.18%
FIRST FINANCIAL CORPORATION -0.84% 35.53 Delayed Quote.-22.29%
LETS HOLDINGS GROUP CO., LTD. 2.89% 11.4 End-of-day quote.88.74%
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Financials (USD)
Sales 2020 86 727 M - -
Net income 2020 13 966 M - -
Net Debt 2020 - - -
P/E ratio 2020 16,7x
Yield 2020 2,75%
Capitalization 228 B 228 B -
Capi. / Sales 2020 2,63x
Capi. / Sales 2021 2,64x
Nbr of Employees 213 000
Free-Float 99,8%
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Technical analysis trends BANK OF AMERICA CORPORATIO
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Mean consensus OUTPERFORM
Number of Analysts 27
Average target price 28,13 $
Last Close Price 26,35 $
Spread / Highest target 44,2%
Spread / Average Target 6,76%
Spread / Lowest Target -12,7%
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Managers
NameTitle
Brian T. Moynihan Chairman, President & Chief Executive Officer
Catherine P. Bessant Co-COO & Chief Technology Officer
Thomas Kell Montag Co-Chief Operating Officer
Paul M. Donofrio Chief Financial Officer
Thomas J. May Independent Director
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