NY Attorney General sues BofA, ex-honchos

The New York Attorney General has filed a lawsuit against the Bank of America (BofA) and its two former top honchos, including CEO Kenneth Lewis, for duping shareholders and the US government to complete a merger with Merrill Lynch.

Attorney General Andrew M Cuomo has also sued BofA's former CFO Joseph L Price.

"Bank of America's management intentionally failed to disclose massive losses at Merrill so that shareholders would vote to approve the merger.

"Once the deal was approved, BofA's management manipulated the federal government into saving the deal with billions in taxpayer funds by falsely claiming that they would back out of the deal without bailout funds," Cuomo has alleged in his lawsuit announced on Thursday.

 

BofA announced its plan to buy Merrill Lynch in September 2008. By the time of shareholders' approval for the deal in December the same year, Merrill Lynch had run into losses of over $16 billion.

According to the Attorney General, BofA's top management, including Lewis and Price, knew about the massive losses but did not disclose the information so that shareholders would approve the merger.

After the shareholders' nod, "Lewis then misled Federal regulators by telling them that the bank could not complete the merger without an extraordinary taxpayer bailout due to accelerated losses from Merrill", he noted in a statement.

The US government had pumped in $20 billion into BofA.