NEW YORK (Legal Newsline) - New York Attorney General Eric Schneiderman announced a $7.5 million settlement on Friday with the former chief financial officer of Bank of America for allegedly withholding information before a proposed 2008 merger.
Schneiderman's office alleged that Joe Price and other top executives of Bank of America withheld knowledge of mounting losses at Merrill Lynch as the bank sought to merge with the company. Merrill Lynch's losses were allegedly projected at more than $9 billion. Price allegedly failed to disclose that information to shareholders before they voted on the proposed merger.
The settlement with Price comes after Schneiderman settled with Kenneth Lewis, the former CEO of Bank of America. Schneiderman alleged that Price and Lewis misrepresented to shareholders the impact the merger would have on the bank's future earnings.
After allegedly concealing the forecast losses, the bank then sought financial assistance from the federal government, claiming a material adverse change in Merrill's financial condition in the previous three months. The bank allegedly continued to conceal the forecast losses until January 2009, when disclosure of Merrill's fourth-quarter losses resulted in a $50 billion sell-off in shares of Bank of America.
"This settlement is one more step in our effort to hold top financial executives accountable for their actions," Schneiderman said. "As with our settlement last month with CEO Ken Lewis, today's action sends a message that conduct harming investors, shareholders, and the public will not go unpunished. I'm pleased to close the final chapter in our litigation over Bank of America's merger with Merrill, and I will continue to hold individuals - as well as corporations - accountable for their actions."
Under the terms of the agreement, Price must pay $7.5 million to the State of New York and is barred from serving as an officer or director of a public company for 18 months.