This morning, New York Attorney General Andrew Cuomo announced fraud charges against Bank of America (BAC) and former executives Ken Lewis and Joseph Price for concealing loses related to its merger with Merrill Lynch.
BofA spokesman Robert Stickler sent us this response:
“We find it regrettable and are disappointed that the NYAG has chosen to file these charges, which we believe are totally without merit. The evidence demonstrates that Bank of America and its executives, including Ken Lewis and Joe Price, at all times acted in good faith and consistent with their legal and fiduciary obligations. In fact, the SEC had access to the same evidence as the NYAG and concluded that there was no basis to enter either a charge of fraud or to charge individuals. The company and these executives will vigorously defend ourselves.”
Separately, the Bank of America today announced that it has entered into a proposed settlement with the SEC to resolve all cases filed by the SEC related to the Merrill Lynch merger.
Judge Rakoff, who previously rejected a settlement between the two parties, will have to approve the agreement.
According to the BofA release, Bank of America agreed to pay $1 in disgorgement and an additional $150 million as a civil penalty to be distributed to shareholders as part of the SEC’s Fair Fund program, among others:
- Engage an independent auditor to perform an assessment and provide an attestation report on the effectiveness of the company’s disclosure controls and procedures.
- Furnish management certifications signed by the CEO and CFO with respect to proxy statements.
- Retain disclosure counsel to the audit committee of the company’s board of directors.
- Adopt independence requirements beyond those already applicable for all members of the compensation committee of the company’s board of directors.
- Continue to retain an independent compensation consultant to the compensation committee.
- Implement and disclose written incentive compensation principles on the company’s Web site and provide the company’s shareholders with an advisory vote concerning any proposed changes to such principles.
- Provide the company’s shareholders with an annual “say on pay” advisory vote regarding the compensation of executives.