Bank of America waives privilege in Cuomo probe

John O'Brien Oct. 13, 2009, 2:48pm


NEW YORK (Legal Newsline) - Bank of America has agreed to waive attorney-client privilege in New York Attorney General Andrew Cuomo's investigation into whether the company withheld information about its purchase of Merrill Lynch to investors.

The company wrote to the chief of Cuomo's Investor Protection Bureau, David Markowitz, on Monday to inform Cuomo that Bank of America was reconsidering its position in order to further a resolution. Any information it gives Cuomo it is also giving to federal regulators and Congress.

"To be clear, we do not intend to waive any privileges or to produce any privileged documents that were created after (Jan. 16) or that relate solely to private litigation against Bank of America or Merrill Lynch and/or their officers and directors," the letter says.

"As we have discussed, Bank of America is involved in numerous civil proceedings and must preserve its privileges except as indicated."

Two Ohio pension funds and a Texas pension fund are among the five lead plaintiffs appointed by the U.S. District Court for the Southern District of New York who recently filed a consolidated complaint against Bank of America.

Their complaint charges that the company did not disclose billions of dollars in losses by Merrill Lynch or Lynch's plan to give billions in executive bonuses after the January merger

The class action suit says Bank of America agreed to allow Merrill Lynch to pay up to $5.8 billion in executive bonuses after the merger but did not tell its shareholders. Merrill Lynch ended up paying out $3.6 billion in executive bonuses.

Bank of America did not warn its shareholders of Merrill Lynch's heavy losses during the fourth quarter of 2008, though Bank of America's executives knew of them, the complaint said.

After a shareholder vote, Bank of America continued to withhold the information, the complaint said.

Cuomo had written Bank of America to tell it he is frustrated with the company's invocation of attorney-client privilege during his investigation. He has not filed any charges.

A federal judge recently rejected a $33 million settlement between Bank of America and the Securities and Exchange Commission.

Bank of America's letter says it will waive attorney-client privilege in five subjects:

-Disclosures to be made in, or omitted from, a joint proxy statement issued by Bank of America and Merrill Lynch on Nov. 3 except for documents that have no connection to executive compensation;

-Bank of America's consideration of whether to invoke the material adverse change clause of the merger agreement;

-Public disclosure or non-disclosure relating to Merrill Lynch's fourth-quarter losses;

-Public disclosure or non-disclosure to any potential impairment of goodwill of Merrill Lynch during the fourth quarter; and

-Bank of America's communications with the Federal Reserve Board, the Department of Treasury and other federal officials regarding the provision and terms of federal assistance in connection with the merger and Bank of America's consideration of disclosure of such assistance.

From Legal Newsline: Reach John O'Brien by e-mail at

Want to get notified whenever we write about New York Attorney General ?
Next time we write about New York Attorney General, we'll email you a link to the story. You may edit your settings or unsubscribe at any time.

Organizations in this Story

New York Attorney General
99 Washington Square
Albany, NY 12205

More News