Detroit workers observes demonstration outside the Bank of America against the foreclosure proceeding launched against 72-year-old west side resident Rubie Curl-Pinkins. The protest took place on July 22, 2008. (Photo: Alan Pollock).
Originally uploaded by Pan-African News Wire File Photos
Legal action has begun against Bank of America and its former bosses, accusing them of duping investors and taxpayers during the takeover of Merrill Lynch.
The defendants are accused of intentionally withholding details of huge losses Merrill was suffering.
New York state officials have filed the action against the bank, former chief executive Kenneth Lewis and former chief financial officer Joseph Price.
Bank of America said the charges were "regrettable" and lacked merit.
"The evidence demonstrates that Bank of America and its executives, including Ken Lewis and Joe Price, at all times acted in good faith and consistent with their legal and fiduciary obligations," a spokesman said.
He added that US financial watchdog the Securities and Exchange Commission (SEC) had access to the same evidence as New York state officials and had found no basis to bring charges.
After the Merrill bailout, Bank of America received $45bn (£28.5bn) in government funds.
'Arrogant scheme'
According to the lawsuit, the accused withheld the full details of Merrill's financial strife in order that its shareholders would approve the merger.
They had then "manipulated" the federal government by claiming they would back out of the deal unless US bailout funds were received, it was alleged.
"This merger is a classic example of how the actions of our nation's largest financial institutions led to the near-collapse of our financial system," said New York State attorney general Andrew Cuomo.
"Bank of America, through its top management, engaged in a concerted effort to deceive shareholders and American taxpayers at large.
"This was an arrogant scheme hatched by the bank's top executives who believed they could play by their own set of rules. In the end, they committed an enormous fraud and American taxpayers ended up paying billions for Bank of America's misdeeds."
Earlier on Thursday, the SEC said Bank of America had agreed to pay $150m to settle complaints over its handling of the merger.
Last month Bank of America reported a net loss of $194m in the last three months of 2009. That compared with a loss of $1.8bn in the same period a year earlier.
It added that it had repaid the $45bn government bailout money it had received but, taking the impact of this into account, it made a loss of $5.2bn.
Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/8499281.stm
Published: 2010/02/04 18:07:58 GMT
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