New York state officials have sued Bank of America and its former top executives, alleging fraud and deception to obtain billions in taxpayer bail-out funds to acquire Merrill Lynch.
Andrew Cuomo, the New York state attorney general, announced the lawsuit against the bank, former chief executive Kenneth Lewis and former chief financial officer Joseph Price.
He claimed the move was for 'duping shareholders and the federal government in order to complete a merger with Merrill Lynch'.
Mr Cuomo accused Bank of America, through its top management, of engaging in a concerted effort to deceive shareholders and American taxpayers.
The news came just after the Securities and Exchange Commission (SEC) announced that Bank of America had agreed to pay $150m to settle complaints over its handling of the Merrill merger.
Bank of America said it was 'disappointed' by the charges, saying they were 'totally without merit'. The bank said the SEC had access to the same evidence as Mr Cuomo and concluded that there was no basis to enter either a charge of fraud or to charge individuals.
According to the lawsuit, 'Bank of America's management intentionally failed to disclose massive losses at Merrill so that shareholders would vote to approve the merger'.
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