SEC says Cuomo's got it wrong

John O'Brien Feb. 19, 2010, 3:40pm


NEW YORK (Legal Newsline) - The federal Securities and Exchange Commission disagrees with one of the claims made by New York Attorney General Andrew Cuomo in his lawsuit against Bank of America.

The SEC filed a statement of facts Wednesday in its case against Bank of America regarding its merger with Merrill Lynch, stating that an attorney the company terminated its general counsel's employment to retain another employee, now-CEO Brian Moynihan.

Cuomo says Bank of America fired Timothy Mayopoulos because he said the company should disclose Merrill Lynch's forecasted fourth-quarter losses in 2008.

Cuomo's suit says Bank of America misled shareholders about the Merrill Lynch's financial state and the company's plans to give out billions of dollars in executive bonuses so they would approve the merger.

"Mayopoulos was terminated for reasons having no connection to his legal advice or any other aspect of his job performance," the statement of facts says.

"Rather, Mayopoulos was terminated in an attempt by Lewis to avert the imminent departure of the Bank's then-head of global corporate and investment banking, Brian Moynihan, by offering Moynihan the position occupied by Mayopoulos and upgrading the position to one that directly reported to the Chief Executive Officer.

"(Former CEO Kenneth) Lewis's account is corroborated by the testimony of several other senior officers and directors of Bank of America as well as contemporaneous emails and other communications. His account is not contradicted by any evidence."

Cuomo has drawn criticism from some who wonder what remedy his lawsuit can seek. The SEC has reached a $150 million settlement with the company that is subject to a federal judge's approval.

Cuomo also alleges Bank of America misled the federal government to receive Troubled Asset Relief Program funds.

"The question is what public interest this lawsuit really serves. Even if Bank of America did ram a bad deal past its shareholders, the SEC is dealing with the matter, supervised by a federal judge, Jed S. Rakoff, who seems determined to hold the firm fully accountable," the Washington Post wrote in an editorial.

"Meanwhile, Mr. Lewis and (former CFO Joseph Price) have lost their jobs, Bank of America has repaid its federal bailout with interest, and Merrill Lynch is back in the black."

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