Bank of America’s former general counsel Tim Mayopoulos, still does not know why he was fired last December 10.
But today he’ll tell Congress what he does know about the deal between Bank of America and Merrill Lynch that has resulted in numerous private lawsuits, a lawsuit brought by the SEC, and a showdown with a congressional committee.
As we mentioned earlier, new Congressional hearings on the BofA/Merrill saga begin today.
Corporate Counsel reviewed Mayopoulos’s remarks prepared for the House Commitee on Oversight and Government Reform. Here are the highlights:
- Around November 12, 2008, Mayopoulos learned that Merrill’s fourth-quarter losses were projected to be $5 billion. He, partners at Wachtell and a veteran in-house counsel all agreed that that amount did not need to be disclosed to shareholders, in part because the amount was similar to Merrill’s previous losses.
- By December 9, four days after shareholder approval of the merger, he learned that the projected losses were $9 billion. “I have read that the $9 billion projected loss included an additional $2 billion after-tax ‘plug’ figure, referred to as ‘WAG’ — which reportedly stood for ‘Wild arse Guess’…If a big part of it was a ‘Wild arse Guess,’ I believe my legal advice would have been that such a guess was not an appropriate basis for a public disclosure. The law is clear that public disclosures to shareholders must be based on information that is reasonably reliable.”
- Mayopoulos was also concerned the earlier $5 billion projection was a “WAG”.
- Directly after the December 9 meeting when the loss projections were disclosed and because of his concerns about those losses, Mayopolous asked to see Bank of America CFO Joe Price. The meeting never happened and he was fired, effective immediately, the next day.
- After his departure, Mayopoulos was never contacted about what he had been working on.
- It was Mayopoulos’s opinion in early December that a “material adverse change,” one that would trigger the relevant provision to allow Bank of America to terminate the deal, had not occurred.
Read Corporate Counsel’s full report here.
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