Ex-Bank of America CFO to Pay $7.5M to Settle with NY Over Merrill Lynch Acquisition Allegations

Joe Price, the ex-chief finance officer of Bank of America Corp. (BAC) has consented to pay $7.5 million to settle allegations by the state of New York that the bank and its ex-executives misled investors over losses that were happening at Merrill Lynch even as shareholders were getting ready to approve its acquisition by the bank.

Bank of America’s decision to purchase Merrill as Lehman Brothers Holdings Inc. was collapsing was initially seen by many as a positive. However, after the deal was made public and Merrill’s problems soon became known, speculation over how much information was kept from those approving the deal mounted.

The state contended that Bank of America misled shareholders about Merrill’s losses to get the $18.5 billion deal approved. They then got the federal government to contribute bailout money from the Troubled Asset Relief Program to complete the sale. The bank has since become the subject of regulatory investigations and securities lawsuits over their actions. It even consented to pay $2.43 billion in 2012 to resolve a class action securities fraud case filed by investors over the Merrill acquisition. Settlements in total have to date surpassed $50 billion.

In Price’s agreement, reached with New York State Attorney General Eric Schneiderman, he is not denying or agreeing to the allegations of wrongdoing. He did consent to an 18-month bar from serving as a director or officer of a public company for 18 months. Bank of America will pay the costs for Price.

Just last month, Bank of America and its ex-Chairman Kenneth Lewis reached a $25 million settlement with New York, also over allegations they misled investors about the Merrill buy. The bank will pay $15 million while Lewis will pay $10 million and abide by a three-year ban from serving as a director or officer of a public company. The bank will also cover Lewis’s share of the settlement.

In other Bank of America-related news, at, Douglas Campbell, one of its ex-senior vice presidents who became a cooperating witness in the federal government’s bid-rigging investigation. will not be going to jail. As part of his deal with the government, Campbell had pleaded guilty to wire fraud, conspiracy to restrain trade, and conspiracy in 2010.

The U.S. Department of Justice accused Campbell of taking part in a municipal bond bid rigging scheme for several years that involved working out with other scammers ahead of time who would win bids on municipal contracts and investment agreements that CDR Financial Products had brokered. He would purposely turn in bids to CDR that he knew would lose.

Bank of America settled allegations by the US and state governments for $137.3 million. Settlements were also reached with UBS (UBS), Wells Fargo & Co. (WFC), JPMorgan Chase and Co (JPM)., and General Electric Co.

The SSEK Partners Group is an institutional investor fraud law firm.

Ex-Bank of America employee avoids punishment in bid rigging case, Reuters, April 22, 2014

BofA Ex-CFO Settles Merrill Case With New York, The Wall Street Journal, April 24, 2014

Lewis, BofA Reach $25 Million Pact With N.Y. Over Merrill, Bloomberg, March 26, 2014

More Blog Posts:
U.S. Wants Bank of America to Pay Over $13B Over Residential Mortgage-Backed Securities, Institutional Investor Securities Blog, April 24, 2014

Bank of America, Its Ex-CEO To Pay $25M to Settle Securities Case with NY Over Merrill Lynch Deal, Stockbroker Fraud Blog, March 31, 2013

$500M MBS Settlement Reached Between Countrywide and Investors, Stockbroker Fraud Blog, May 10, 2013