Monday, October 12, 2009

Bank of America Said to Be in Talks on Merrill Legal Records

. Monday, October 12, 2009

By stockOzone team

Bank of America Corp., facing investigations and lawsuits over its $29 billion acquisition of Merrill Lynch & Co., is in talks with regulators to provide documents about the legal advice it received on the deal, a person familiar with the matter said.

The bank has been in discussions with New York Attorney General Andrew Cuomo about turning over documents, changing its position that the information can’t be disclosed because it’s privileged communication between the bank and its lawyers, the person said yesterday.

Cuomo said last month that Bank of America, by invoking attorney-client privilege, was hindering his investigation into whether anyone at the bank should be charged. Cuomo is probing the Merrill acquisition and the brokerage’s decision to award $3.6 billion in bonuses in late December, days before Bank of America bought it on Jan. 1.

Attorney-client privilege has been a sticking point in probes of Bank of America by Cuomo’s office, Congress and the U.S. Securities and Exchange Commission, said the person, who requested anonymity because the discussions are private. The bank is seeking to put the issue behind it, the person said. No privileged documents have been turned over yet, the person said.

‘Exciting Revelation’
“The most exciting revelation isn’t the substance of the legal advice, which is probably going to be fairly cautious,” Anthony Sabino, a professor of business and law at St. John’s University, said in a phone interview. “But we’re going to know the names of specific legal authorities, inside and outside of the bank, making comments to specific executives at Bank of America. It’s going to be really exciting to know who those people are.”

Shirley Norton, a spokeswoman for the Charlotte, North Carolina-based bank, didn’t return a voice-mail message seeking comment after regular business hours yesterday. Richard Bamberger, a Cuomo spokesman, also didn’t return a call after regular business hours yesterday.

Shareholders and regulators have accused bank officials of failing to disclose the bonuses, as well as Merrill’s fourth quarter loss of $15.8 billion, before the sale was approved.

Senior bank officials didn’t disclose “material non-public information” to shareholders on at least four instances in the fourth quarter, Cuomo’s office said in a Sept. 8 letter. The bank has blocked former General Counsel Timothy Mayopoulos and Chief Financial Officer Joe Price from answering questions, citing attorney-client privilege, according to the letter sent to Lewis Liman, a Bank of America attorney.

Law Firms
Bank of America was represented in the Merrill merger by Wachtell, Lipton, Rosen & Katz, while Merrill was represented by Shearman & Sterling LLP, both based in New York, according to court records.

A federal judge last month rejected a $33 million settlement between Bank of America and the SEC after the agency’s probe of the merger. U.S. District Judge Jed Rakoff in Manhattan asked whether the bank had lied to shareholders and why the company’s executives haven’t been sued.

That case, in which the SEC alleged Bank of America issued a deceptive proxy statement, is scheduled for trial in March.

Disclosure: Author does not own any of the stocks discussed here.

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