Bank of America Corp., former Chief Executive Kenneth Lewis and former Chief Financial Officer Joe Price were charged with fraud by New York's attorney general over the bank's acquisition of Merrill Lynch & Co.
Attorney General Andrew Cuomo accused the defendants of intentionally failing to disclose massive losses that Merrill was racking up prior to Dec. 5 shareholder votes on the merger.
After concealing the losses, the defendants then told the federal government the bank would back out of the merger if it did not get billions of dollars of taxpayer help, according to Cuomo.
"The behavior is just egregious and reprehensible," he said on a conference call. His office said Bank of America's current CEO, Brian Moynihan, is not under investigation.
Separately, the U.S. Securities and Exchange Commission said the largest U.S. bank has agreed to pay a $150 million civil penalty and improve disclosure and corporate governance to settle the agency's two federal lawsuits over the Merrill deal. The settlement requires court approval.
Bank of America spokesman Bob Stickler said the bank found it "regrettable" that Cuomo filed the charges, which it said lack merit.
"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," he said.
Price is head of consumer banking at Bank of America, while Lewis retired at the end of 2009 after a 40-year career at the bank. Lawyers for both men were not immediately available for comment.
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