(Newser)
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More than three years after Bank of America's $50 billion takeover of Merrill Lynch went horribly awry, leading to a second mammoth taxpayer bailout of $20 billion, a shareholder lawsuit against the bank is finally producing details about who knew what and when, reports the New York Times. BofA told shareholders in September 2008 that the deal would reduce earnings 3% in 2009, and would add a bit to profits by 2010. However, by the time shareholders voted on the deal on Dec. 5, bank execs knew the merger would reduce earnings by 13% in 2009 and 2.8% in 2010, according to a deposition by then-CEO Kenneth Lewis earlier this year.
Lewis' "sworn admissions leave no genuine dispute that his statement at the Dec. 5 shareholder meeting was materially false when made," states the filing in the shareholder's lawsuit. Emails uncovered by the shareholder lawsuit show that BofA officials knew that Merrill's losses were piling up by at least Nov. 26—and that on Dec. 3, Lewis and top execs knew Merrill lost $14 billion in the fourth quarter of 2008 ($9 billion after taxes). When the bank's CFO said he would not disclose the deteriorating Merrill numbers to shareholders, the then-treasurer warned not doing so "could be a criminal offense, stating that he did not want to be 'talking through a glass wall over a telephone'"—apparently referring to prison—"if no disclosure was made," states the shareholder filing.
