Later On

Rick Rothacker in McClatchy:

New York Attorney General Andrew Cuomo today announced that his office is filing civil charges against former Bank of America Corp. chief executive Ken Lewis, former chief financial officer Joe Price and the Charlotte bank.

The charges are the latest legal fallout from a long-running investigation of the bank’s Jan. 1 acquisition of Merrill Lynch & Co.

In a news conference this morning, Cuomo said his office is charging the bank with securities fraud because it "understated" Merrill fourth-quarter 2008 losses to investors in order to win approval of the deal at a December 5, 2008 shareholder vote. It then turned around and "overstated" its ability to legally escape the deal in order to obtain $20 billion in government bailout funds, Cuomo said. Merrill also paid out $3.6 billion in bonuses to its employees in December of 2008.

Bank of America’s management misled shareholders, the bank’s board and the public, Cuomo said. "The behavior is egregious and reprehensible," he said.

The Securities and Exchange Commission this morning also said it filed a motion seeking court approval of a proposed settlement in which Bank of America would pay $150 million and strengthen corporate governance practices to settle charges that the company did not properly disclose bonuses and losses as part of its Merrill Lynch & Co. acquisition.

"We find it regrettable and are disappointed that the NYAG has chosen to file these charges, which we believe are totally without merit," Bank of America spokesman Bob Stickler said. "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. 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 company and these executives will vigorously defend ourselves."

Price is now the bank’s head of consumer banking. Stickler said his job status has not changed…

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