Blog on the Run: Reloaded

Monday, October 12, 2009 11:13 pm

Ken Lewis: Not going quietly

Filed under: Uncategorized — Lex @ 11:13 pm

Looks like Bank of America’s attorneys really are going to be in big legal trouble because of what BofA shareholders were and were not told before BofA’s takeover of Merrill Lynch. BofA is waiving attorney-client privilege.

From The Wall Street Journal (text h/t Zero Hedge):

Bank of America Corp. agreed to hand over documents that detail the legal advice it received during its purchase of Merrill Lynch & Co., according to people familiar with the situation, a sharp reversal after months of resisting such a move.

The new legal approach is in part intended to pave the way to a settlement of various investigations, say people familiar with the matter. It’s also designed to ease pressure on the bank as it works to restore stability amid the unexpected departure of chief executive Kenneth Lewis at the end of 2009.

The board voted to waive the privilege on Friday. On Monday, the bank informed Mr. Cuomo’s office that it had reversed course and was waiving its privilege.

The shift will likely result in the bank handing over troves of documents — including emails and memos between Bank of America and its outside law firms — to the federal, state and Congressional officials who are investigating the Merrill purchase.

BofA’s move will likely reveal exactly what advice was provided by outside firms Wachtell, Lipton Rosen & Katz, which represented Bank of America during the Merrill transaction and a long and trusted advisor to the bank, as well as Merrill’s counsel, Shearman & Sterling LLP.

“You can see where this is going,” said James Cox, a law professor at Duke University. “This is going to get to the down and dirty question of what counsel did say and did not say, what counsel meant and did not mean.”

Now what will be really interesting, given that when this shotgun wedding took place it was the government carrying the shotgun, is what all this might tell us about the role of federal authorities, particularly Ben Bernanke and Hank Paulson. It would probably be too much to hope that those officials could face charges, or even civil liability, for misleading BofA shareholders. But a guy can dream, I guess.

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