First of many no doubt… Steven Sklar, a Bank of America (BAC) shareholder is suing over the Merrill Lynch acquisition and the fact that shareholders weren’t told about Merill’s stunning Q4 loss before they voted.
Bloomberg: The Dec. 5 vote to buy the bank was based on an Oct. 31 proxy statement that hadn’t been revised to account for the investment firm’s poor performance in the fourth quarter of 2008, according to a complaint filed yesterday by bank shareholder Steven Sklar in federal court in New York.
“Despite his knowledge of Merrill Lynch’s staggering losses,” Bank of America Chairman Kenneth Lewis didn’t relay that information to the bank’s investors and allowed the deal to close, Sklar said in his complaint.
This sounds legitimate to us. We don’t think Bank of America shareholders ought to have taken a bath if the whole reason for non-disclosure is that Ken Lewis thought it was his patriotic duty to save Merrill. And we know the plaintiff has the timeline right, since BofA went to the feds asking for more money in mid-December. Not that this or any other shareholder suit will do any good for shareholders, but as more emerges on this, we think it will be increasingly difficult for Lewis — who just bought 200,000 more share — to justify his actions and keep his job.