Thursday, February 4, 2010

Bank of America charged with fraud in Merrill deal

This is hot off the press (see today's WSJ). NY Attorney General, Andrew Cuomo has charged Bank of America (BofA) and its executives with fraud in regards to BofA's purchase of Merrill Lynch in December 2008. Cuomo argues that BofA knew of but did not disclose the ($16 billion) losses at Merrill to shareholders when it was seeking approval to purchase Merrill.

Today's WSJ says that Cuomo is claiming that BofA also defrauded the U.S. Government (i.e., you and me) by exploiting "the economic fear that existed in late 2008" so that it could get $20 billion in aid from the U.S. Government by saying the losses at Merrill were worse than anticipated.

This quote from today's WSJ summarizes Cuomo's claims:
"We believe bank management understated the Merrill Lynch losses to shareholders to get shareholders to approve the deal then overstated their ability to terminate the agreement to get $20 billion from federal government," Mr. Cuomo said on a conference call.
Sounds like those BofA executives deserve a hefty bonus don't you think?!

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