In a charges that many are scratching their heads about, New York Attorney General Andrew Cuomo, who seems to be positioning himself for moving up in politics, filed securities fraud charges against former Bank of America CEO Ken Lewis and former CFO Joe Price in reference to the merger with Merrill Lynch.
The charges stem from those already examined by the Securities and Exchange Commission (SEC) where they found no individual at the company had deliberately made any false statements or hid any information they were required by law to put forth, but were rather acting under the guidance of legal council. This is why I assert Cuomo is wrongly chasing after something that doesn’t exist in order to increase his political capital.
According to the lawsuit, Lewis and Price deliberately held back vital information which the shareholders should have had when deciding on whether to approve the deal or not. Also in contention is the assertion of Cuomo that Bank of America threatened to pull out of the deal if the government would give them billions in taxpayers’ funds through the TARP program.
Personally I think Bernanke and Paulson are nervous about people like Cuomo continuing to pursue the matter, as they’re the ones who could eventually be identified as possibly engaging in illegal activities on behalf of the Federal Reserve and Treasury Department.
A secondary consideration is Cuomo is making a backhanded swipe at the SEC, implying they don’t know how to conduct and investigation or that they should have been politically correct and looked for heads to roll, whether it was related to breaking the law or not.
The SEC has stated more than once in the past that there were no individuals it found to have broken the law or were attempting to navigate around it.
So for Cuomo to go forward with this implies he has information the SEC hasn’t been able to find, or he’s just making stuff up as he goes to present himself as a defender of the people against the big banking industry. That’s real brave at a time like this.
One of Ken Lewis’ attorneys released this statement concerning the lawsuit:
“The decision by Mr. Cuomo to sue Bank of America, Mr. Lewis and other executives in connection with BofA’s acquisition of Merrill Lynch is a badly misguided decision without support in the facts or the law. Mr. Lewis and other BofA employees acted in good faith in the Merrill Lynch transaction, following the expert legal advice of counsel and in the best interests of BofA shareholders. The Merrill Lynch transaction — undertaken at a time of significant danger to our financial system — has also proven to be an unmitigated success for BofA shareholders.
“Mr. Lewis has been unfairly vilified by the political search for accountability for the financial meltdown. This suit is not fair, it is without factual or legal basis and we look forward to prevailing in a court where the facts and law do matter.”
The attorney for Joe Price added in a statement on behalf of his client that “The complaint filed by the New York attorney general makes allegations that are flatly contrary to the evidence and contrary to the conclusions of the Securities and Exchange Commission based on the same evidence.”
This is the particular problem I have with Cuomo’s lawsuit. There seems to be no new evidence introduced, and it also seems he’s simply interpreting it the way he sees fit to advance his political career rather than really look for the truth.
