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New York’s Attorney General Andrew Cuomo filed civil charges today against Bank of America and its former CEO Kenneth Lewis. The charges arise from the bank’s controversial acquisition of Merrill Lynch in 2009. The suit is being filed under the Martin Act, a New York securities law that permits both civil and criminal penalties.
Andrew Cuomo accuses Kenneth Lewis and Joe Price, the former chief financial officer of Bank of America, of misleading investors ahead of their late 2008 vote in favor of the Merrill deal. Price is currently head of the bank’s consumer banking division.
Andrew Cuomo said Bank of America’s executives kept investors in the dark about Merrill’s deteriorating financial condition in the run-up to the shareholder vote on the merger. “We believe the bank management understated the Merrill Lynch losses to shareholders, then they overstated their ability to terminate their agreement to secure $20 billion of TARP money, and that is just a fraud,” Cuomo said at a press conference. Cuomo added, “Bank of America and its officials defrauded the government and the taxpayers at a very difficult time.”