BofA masked Merrill loss before 2008 vote: filings
By Jonathan Stempel
(Reuters) - Top executives at Bank of America Corp did not tell shareholders just prior to a 2008 vote on its purchase of Merrill Lynch & Co that losses were mounting and expected to weigh down earnings for years, papers filed in private shareholder litigation show.
But the bank and former Chief Executive Kenneth Lewis said in their own court papers that they should not be liable to shareholders who claimed to have lacked information they needed to vote on the once $50 billion merger.
Lewis also said he had been advised by the bank's law firm and chief financial officer that no disclosure was necessary.
The papers, including sworn testimony from Lewis, were filed on Sunday night in class-action litigation accusing the second-largest U.S. bank of fraudulently misleading holders of shares and call options about Merrill's losses and bonus payouts.
They may also strengthen the contention that Bank of America withheld material information just prior to the December 5, 2008 merger vote, a characterization that Lewis resisted in a March 27 deposition by the shareholders' lawyers.
"In all cases of securities fraud, the fight is always about who knew what, when," said Hillary Sale, a law and business professor at Washington University in St. Louis School of Law. "This deposition shows that before the actual shareholder vote, there was knowledge that the numbers were different. Call it large, call it substantial, but it is likely material."
The New York Times earlier reported some of the court papers, which were filed with the federal court in Manhattan.
Other defendants are former Chief Financial Officer Joe Price; former Merrill Chief Executive John Thain, and outside Bank of America directors. A trial before U.S. District Judge Kevin Castel is scheduled for October 22. Continued...