Cuomo: Nothing new in Bank of America issue

John O'Brien Sep. 14, 2009, 3:38pm


NEW YORK (Legal Newsline) - New York Attorney General Andrew Cuomo is saying there are no new developments in a possible case against Bank of America Corp. despite a report by The Associated Press that says otherwise.

The AP report, released Monday, cites an unnamed source who said Cuomo is preparing civil charges against Bank of America executives that Cuomo feels withheld information about Merrill Lynch's financial troubles before Bank of America purchased it.

Cuomo's communications director Richard Bamberger refuted the report.

"In response to news reports about supposed developments in the Attorney General's investigation of the Bank of America-Merrill Lynch merger, there have been no new developments in the investigation since the letter sent by the Attorney General's Office to Bank of America last week," Bamberger said.

Cuomo wrote Bank of America last week to tell it he is frustrated with the company's invocation of attorney-client privilege during his investigation. He feels the company hid information about Merrill Lynch's heavy fourth-quarter losses last year, as well as Merrill's plan to dole out $3.6 billion in executive bonuses.

"The facts of the cascading losses and bonus payments -and the facts of Bank of America's senior executives' knowledge of these events - are straightforward," the letter written by Cuomo's Consumer Investor Protection Bureau chief David Markowitz says.

"However, as discussed in detail below, the decision-making process by which Bank of America and its executives decided not to disclose these material facts to Bank of America's shareholders has been hidden from our investigation by Bank of America's repeated invocation of the attorneyclient privilege.

"These invocations have been made even though Bank of America has offered reliance on legal advice as a justification for each of its failures to disclose."

Bank of America said it was disappointed by Cuomo's letter.

"We were extremely surprised and disappointed by the letter for several reasons," the company's attorneys wrote in the letter, obtained by The New York Times.

"We do not understand your office's apparent refusal to meet with Bank of America's counsel and to hear Bank of America and Merrill Lynch's side of the story, including why there is no basis for seeking to invade the attorney-client privilege here.

"(T)he basic premise of the letter is simply wrong. Bank of America has not put at issue the subject matter of any advice of counsel. Nor has Bank of America offered reliance on legal advice as a justificiation for its disclosures."

Also on Monday, a federal judge rejected a $33 million settlement between Bank of America and the Securities and Exchange Commission.

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