The agreement is part of a larger $25 million settlement that Lewis and Bank of America made with the state of New York earlier today. The bank’s former CFO Joe Price has not yet reached a deal.
The NY Attorney General’s office had alleged that, back when Lewis and Price talked shareholders into merging with a sinking Merrill Lynch back in 2008, the top BofA execs were well aware of the fact they were acquiring a company facing more than $9 billion in losses. Problem is, they allegedly held back this important to the investors who ultimately approved the merger. The gruesome twosome were also accused of misleading shareholder about the negative impact that buying Merrill Lynch would have on BofA’s future earnings.
In the wake of the Merrill deal, BofA sought billions in bailout funds from the federal government, claiming there had been a “material adverse change” in Merrill’s financial condition over the previous three months. The execs waited until mid-January 2009 to reveal Merrill’s billions in loss, leading to a $50 billion sell-off in BofA shares.
In addition to the ban on being a top executive for the next few years, Lewis has agreed to pay a penalty of $10 million to the state of New York. Bank of America will fork over an additional $15 million, which is a drop in the bucket compared to the more than $40 billion is penalties, payouts, refunds, loan adjustments and legal fees the bank has paid in the wake of the Merrill and Countrywide acquisitions.
While banks have paid out billions over the mortgage meltdown and other related bad behaviors, very few top executives have been held personally accountable for their actions. As we reported back in September 2013, on the fifth anniversary of the Lehman Brothers bankruptcy that set the dominos in motion, many executives tied to the meltdown — including Lewis — are not exactly hurting for cash, and many of them are doing just fine.
“[N]o one, no matter how rich or powerful, should escape accountability for their actions — especially ones that caused such damage to shareholders,” said Attorney General Schneiderman. “Today’s settlement demonstrates a major victory in our continued commitment to applying the law equally to individuals, as well as corporations.”
Schneiderman says his office intends to file a summary judgment motion against Price on April 4.