Bank of America: the Gift that Keeps on Giving
Can Bank of America (NYSE: BAC) ever catch a break? Apparently not, because now a class-action lawsuit has been filed citing that the firm did not disclose material information relating to the magnitude of the losses at Merrill Lynch, just days before Bank of America shareholders were set to vote on a %50 billion merger. Former CEO Ken Lewis claims that the bank's law firm and CFO both advised him that no further disclosure was needed, but shareholders disagree.
Defendants in this case include Lewis, former CFO Joe Price, former Merrill CEO John Thain, and other non-executive Bank of America directors. In court papers, the bank said that shareholders failed to show damages as a result of any alleged impairment to voting rights. At the time of the vote, the losses at Merrill for the fourth quarter were expected to be around $9 billion, but that number ended up being $15.84 billion after final tallies. This forced Bank of America into a second, $20 billion government bail out.
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