The New York Attorney General’s office said Thursday it filed civil charges against Bank of America and its former CEO Ken Lewis, saying Connecticut’s biggest out-of-state bank misled investors about Merrill Lynch before it acquired the Wall Street bank in early 2009.
Civil charges were also being filed against Joe Price, the bank’s former chief financial officer.
At the same time Attorney General Andrew Cuomo’s office was filing its civil charges, the Securities and Exchange Commission reached a settlement to resolve separate federal charges it brought against Bank of America over similar issues. It is the second time the SEC and Bank of America have tried to settle the case.
Bank of America has been accused of failing to properly disclose losses at Merrill and bonuses paid to investment bank employees before the deal closed. Cuomo called Bank of America’s actions “egregious and reprehensible” in deceiving not only shareholders, but also the federal government.
The bank received an additional $20 billion in government bailout funds in January 2009 to help offset losses it absorbed as part of the Merrill Lynch acquisition. In December, Bank of America repaid the $20 billion, plus the initial $25 billion it received in government bailout money.
Lewis stepped down as CEO from Bank of America Corp. on Dec. 31 after almost a year of strife that followed the bank’s purchase of Merrill Lynch. Price became head of the bank’s consumer banking division, taking over for Brian Moynihan, who succeeded Lewis as CEO on Jan. 1.
Moynihan is not under investigation.
“We are disappointed and find it regrettable that the NYAG has chosen to file these charges, which we believe are totally without merit,” Bank of America spokesman Robert Stickler said.
“The evidence demonstrates that Bank of America and its executives, including Ken Lewis and Joe Price, at all times acted in good faith and consistent with their legal and fiduciary obligations,” Stickler said. “In fact, the SEC had access to the same evidence as the NYAG and concluded that there was no basis to enter either a charge of fraud or to charge individuals.”
Bank of America agreed to pay $150 million to shareholders to settle the SEC charges. The agreement still must be approved by U.S. District Judge Jed S. Rakoff. (AP)
Cigna CEO outlines merger, acquisition priorities
Cigna Corp. Chief Executive David Cordani told Wall Street analysts Thursday the managed care company with operations in Bloomfield is open to possible mergers and acquisitions.
Cigna said Thursday it earned it earned $330 million, or $1.19 per share, in the final quarter of 2009 on $4.64 billion in revenue.
The insurer’s financial picture was helped by improving equity markets that erased an earnings hit it suffered in 2008 from a couple of discontinued businesses.
After the earnings were released, Cordani addressed analysts, one of whom inquired about the company’s international growth and capital deployment plans.
QUESTION: On merger and acquisition priorities, will they be consistent with your desire to grow faster internationally, or will they be more domestically based?
RESPONSE: M&A is clearly our second priority once we take care of the appropriate needs of capital for the ongoing operations. We continue to expect, actually, that our industry will consolidate over time, although the view, at least in the U.S., is that the (Obama) administration views that the maintenance of choice in the industry is rather important.
We would look at M&A two ways: One is capability-based and the second is scale-based. And as to whether or not we have a bias toward non-U.S. or U.S. assets, I would say we’re open to either. (AP)
