By LOUISE STORY and ERIC DASH
In a stunning reversal, Bank of America’s board has voted to reveal the legal advice that the bank received late last year about its merger with Merrill Lynch, according to three people briefed on the matter.
After six months of digging in its heels, the bank is expected to provide legal documents that could shed light on how its lawyers advised executives to deal with the disclosure of key information about losses and bonuses at Merrill Lynch to the bank’s shareholders.
With a stroke of a pen, the bank’s decision will remove a stumbling block in a wide range of cases. The documents may exonerate bank executives, like its retiring chief, Kenneth D. Lewis, or may provide the evidence that some investigators are seeking to lay blame at individuals’ feet.
The bank has refused to allow its attorneys to answer questions about many aspects of the deal, even as pressure to do so surged from many corners. Some of the pressure came from lawmakers in Congress and regulators who are deciding whether to allow Bank of America to return part of the $45 billion it received in bailout funds — an outcome the bank has been urgently pursuing.
The bank’s decision was prompted by a series of conversations over the last two weeks with the office of New York’s attorney general, Andrew M. Cuomo, who had threatened to charge individual Bank of America executives — including Mr. Lewis — with wrongdoing, the people briefed on the matter said. The bank also faced a deadline this week to provide a log of its private legal documents to a House committee.
The legal and public relations cost of the bank’s merger with Merrill Lynch, conceived in the heat of the financial crisis last fall, have threatened to overwhelm most of the benefits from the merger. Mr. Lewis, a 40-year veteran of the bank and its predecessors, announced his retirement two weeks ago — far earlier than expected — in part due to exasperation and weariness over the slew of legal cases.
At their core, the investigations center on why the bank kept key information about Merrill’s bonuses or its losses secret from its shareholders. Each case raises a different set of questions about decisions made just before shareholders voted to approve the merger; as well as how the decisions were made and why they were not shared with the public or at least bank shareholders.
In particular, the bank’s decision not to disclose millions of dollars in bonuses that Merrill hastily paid out before the deal has grabbed the attention of prosecutors. But serious questions have also been raised about surprise losses at Merrill that were not disclosed.
For Bank of America, providing the legal documents to Mr. Cuomo and other investigations offers the chance of moving toward a resolution.
Lawyers from Cleary Gottlieb Steen & Hamilton as well as Paul, Weiss, Rifkind, Wharton & Garrison advised the bank to waive its right to legal secrecy, which is known as attorney-client privilege. Bank officials supported the idea because they felt they have nothing to hide and want the bank to be able to move on, according to a person familiar with the bank’s decision.
Here is the link to the article's website:
http://www.nytimes.com/2009/10/13/business/13legal.html?_r=1
In a stunning reversal, Bank of America’s board has voted to reveal the legal advice that the bank received late last year about its merger with Merrill Lynch, according to three people briefed on the matter.
After six months of digging in its heels, the bank is expected to provide legal documents that could shed light on how its lawyers advised executives to deal with the disclosure of key information about losses and bonuses at Merrill Lynch to the bank’s shareholders.
With a stroke of a pen, the bank’s decision will remove a stumbling block in a wide range of cases. The documents may exonerate bank executives, like its retiring chief, Kenneth D. Lewis, or may provide the evidence that some investigators are seeking to lay blame at individuals’ feet.
The bank has refused to allow its attorneys to answer questions about many aspects of the deal, even as pressure to do so surged from many corners. Some of the pressure came from lawmakers in Congress and regulators who are deciding whether to allow Bank of America to return part of the $45 billion it received in bailout funds — an outcome the bank has been urgently pursuing.
The bank’s decision was prompted by a series of conversations over the last two weeks with the office of New York’s attorney general, Andrew M. Cuomo, who had threatened to charge individual Bank of America executives — including Mr. Lewis — with wrongdoing, the people briefed on the matter said. The bank also faced a deadline this week to provide a log of its private legal documents to a House committee.
The legal and public relations cost of the bank’s merger with Merrill Lynch, conceived in the heat of the financial crisis last fall, have threatened to overwhelm most of the benefits from the merger. Mr. Lewis, a 40-year veteran of the bank and its predecessors, announced his retirement two weeks ago — far earlier than expected — in part due to exasperation and weariness over the slew of legal cases.
At their core, the investigations center on why the bank kept key information about Merrill’s bonuses or its losses secret from its shareholders. Each case raises a different set of questions about decisions made just before shareholders voted to approve the merger; as well as how the decisions were made and why they were not shared with the public or at least bank shareholders.
In particular, the bank’s decision not to disclose millions of dollars in bonuses that Merrill hastily paid out before the deal has grabbed the attention of prosecutors. But serious questions have also been raised about surprise losses at Merrill that were not disclosed.
For Bank of America, providing the legal documents to Mr. Cuomo and other investigations offers the chance of moving toward a resolution.
Lawyers from Cleary Gottlieb Steen & Hamilton as well as Paul, Weiss, Rifkind, Wharton & Garrison advised the bank to waive its right to legal secrecy, which is known as attorney-client privilege. Bank officials supported the idea because they felt they have nothing to hide and want the bank to be able to move on, according to a person familiar with the bank’s decision.
Here is the link to the article's website:
http://www.nytimes.com/2009/10/13/business/13legal.html?_r=1
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