Bank of America to Hand Over Merrill Merger Files

By Tomoeh Murakami Tse
Washington Post Staff Writer
Tuesday, October 13, 2009

NEW YORK, Oct. 12 -- Bank of America will turn over to investigators legal documents related to its purchase of Merrill Lynch, reversing its previous stance that such information must be kept confidential under privacy rules, three sources familiar with the decision said Monday.

The move came after Bank of America directors met on Friday to discuss the matter, said the sources, who spoke on the condition of anonymity because they did not have authorization to speak publicly and because the inquiries are ongoing. For months, the bank has resisted divulging advice it received from lawyers about the merger, citing attorney-client privilege. The board voted on Friday to waive that privilege, the sources said.

Various agencies have been investigating Bank of America over its acquisition of Merrill Lynch in a hurried deal backed by the federal government at the height of the financial crisis. The inquiries have focused on whether shareholders were misled about Merrill's financial condition and billions of dollars in bonuses authorized for Merrill executives shortly before shareholders voted to approve the merger.

Pressure has mounted in recent weeks as New York Attorney General Andrew M. Cuomo subpoenaed the bank's directors and prepared to file civil fraud charges against top executives. The bank also faced a Wednesday deadline from the House Oversight and Government Reform Committee to turn over information.

Bank of America informed Cuomo's office about the board's vote on Monday, and is expected to turn over the trove of documents in about a week, according to one of the sources. A Bank of America spokesman declined to comment.

The Securities and Exchange Commission is also preparing to try a separate case against Bank of America in federal court after U.S. District Judge Jed S. Rakoff rejected a $33 million settlement the agency reached with the bank. Rakoff criticized the SEC for not bringing action against Bank of America executives.

The SEC has said that Bank of America executives relied on advice from their lawyers, and that there was no evidence they intended to mislead shareholders. The company was advised on the merger by Wachtell, Lipton Rosen & Katz.

By agreeing to hand over the documents, the bank is hoping to put the highly public controversy surrounding the Merrill Lynch deal behind it, according to a source familiar with its thinking. Bank of America has said it did nothing wrong, and is in the process of selecting a successor to Kenneth D. Lewis, the bank's beleaguered chief executive. He recently decided to retire at the end of the year.

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