Lawyers for former Bank of America CEO Ken Lewis call civil lawsuit accusing him of misleading investors during bank's 2009 merger with Merrill Lynch 'implausible,' say it should be tossed out
August 23, 2010
– Lawyers for former Bank of America CEO Ken Lewis said in a court filing that a lawsuit accusing him of misleading investors during the company's 2009 merger with Merrill Lynch was "implausible" and "inconsistent," and should be tossed out.
The filing was a response to a civil lawsuit submitted by New York Attorney General Andrew Cuomo in February which accused Lewis and Bank of America of failing to properly disclose losses and bonuses at Merrill before the deal closed.
At the time, attorneys for Lewis had called the suit "misguided," but they elaborated on that criticism in a lengthy legal filing Wednesday that both praised the merger as "an unmitigated financial and strategic success" and condemned Cuomo for distorting the facts.
"Some have looked to assign blame for every aspect of the financial crisis, even where this is no evidence of misconduct," they wrote. "This case is a product of that dynamic and does not withstand either legal or factual scrutiny."
It added that Cuomo's claim that Lewis was motivated by greed and hubris, "flies in the face of the actual facts and rational logic."
Lewis, they noted, held millions of shares of Bank of America stock, and stood to lose a lot if the merger wasn't successful.
Cuomo's office released a statement saying it stood by its allegations. The statement said Lewis' recent court filings, "do nothing to change this office's view of the case."
The civil suit makes a variety of claims about misconduct by Lewis and other bank officials, including Joe Price, who is now head of the company's consumer banking division.
Among other things, it said the executives misled shareholders about $15 billion in losses at Merrill in the fourth quarter of 2008, failed to disclose $3.6 billion in year-end bonuses for Merrill employees, and then overstated losses to get a better bailout package from the U.S. government.
The case is pending before a state court in Manhattan.
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