The US Securities and Exchange Commission (SEC) yesterday sued Bank of America for a second time over its takeover of Merrill Lynch, accusing the bank of failing to disclose huge losses at Merrill before shareholders voted on the merger.
The SEC filed its civil lawsuit in a Manhattan federal court, a day after a judge refused to let it add charges to its case accusing the largest US bank of misleading shareholders about $3.6bn (£2.2bn) of bonuses Merrill paid out.
In the latest lawsuit, which was expected, the SEC accused the bank of violating federal proxy rules by failing to tell shareholders prior to a 5 Dember 2008 vote that Merrill had lost $4.5bn that October and billions more in November.
The SEC said “Bank of America kept shareholders in the dark” and should have disclosed “fundamental changes” in Merrill’s health. It is seeking a fine and other remedies. A spokesman for the Charlotte, North Carolina-based bank, said: “These charges are totally without merit. We intend to vigorously defend ourselves.”
Meanwhile, former Merrill Lynch?chief executive John Thain is reported to have held talks with troubled banking group CIT over taking the top job. He is also said to have spoken to private equity firm Stone Point Capital.
City A.M. Reporter