Report: Bank of America Won’t Pay NY Damages on Merrill Buy
Bank of America (NYSE:BAC) is beginning to see light at the end of the tunnel that has been the 2009 purchase of Merrill Lynch. According to a Reuters report, New York Attorney General Eric Schneiderman has conceded on making the bank pay damages on the investigated purchase, though Schneiderman is pursuing judgments against BofA executives and possibly the bank itself.
A member of Scheiderman’s team told a conference on January 17 that the attorney general’s office was finished seeking damages from Bank of America and instead was “trying to move [the case] to a conclusion,” Reuters reports. That conclusion may include judgments against former CEO Kenneth Lewis and then-CFO Joe Price that would prohibit the two from working in securities in the future, as well as ensuring they won’t serve on any boards of publicly traded companies.
Bank of America not paying New York damages on its questionable purchase of Merrill Lynch has not sat well with Governor Andrew Cuomo, several sources indicate. New York’s case against Bank of America with respect to the Merrill deal originated with Cuomo, back when the governor was the state attorney general. Schneiderman’s inability to get BofA to pay damages has disconcerted Cuomo along with another high-profile case.
According to a New York Times report, Schneiderman and Cuomo are at odds over how $613 million paid by JPMorgan Chase (NYSE:JPM) to New York to settle damages will be spent. Though Schneiderman’s office claims it has the exclusive power to allocate funds as it sees fit, Cuomo wants to use the sum to fund projects benefiting causes outside of the financial regulation sector.
Criticisms over Schneiderman’s handling of the Bank of America Merrill Lynch deal are likely tied to Cuomo’s ideas about the Chase funds’ allocation. Since many investors settled with BofA in a class action suit already, Schneiderman cannot pursue additional monetary damages from the bank on their behalf. The New York AG pledged to continue the case to punish the bank and former executives in other ways. Neither side offered insight on how BofA could be punished outside of financial damages.
As for judgments against former BofA executives (should they become part of the case’s conclusion), the bank can point to their punishments as issues of the past. Ex-CEO Kenneth Lewis reportedly came to an agreement to acquire Merrill Lynch on September 14, 2008. The next day, Lehman Brothers filed for bankruptcy, which paved the way to the financial crisis and subsequent recession.