New York Attorney General Andrew Cuomo said former Chief Executive Officer Kenneth Lewis, now retired, and former Chief Financial Officer Joseph Price "engaged in a concerted effort to deceive shareholders and American taxpayers."
Lewis and Price were aware Merrill Lynch had $16 billion in losses and that "additional losses were forthcoming," the state attorney general's office said in a release. However, the bank executives "chose not to disclose" this information to shareholders before they approved the purchase of Merrill Lynch in a December 2008 vote.
Cuomo said the "arrogant scheme" included a pre-arranged deal with the federal government in which a threat to back out of the Merrill Lynch deal was leveraged to secure $20 billion in bailout funding.
Bank of America said in its own release that it agreed to pay shareholders $150 million to settle a case brought against it by the U.S. Securities and Exchange Commission involving the same allegations.
The settlement must be approved by U.S. District Judge Jed Rakoff in New York, who rejected a $33 million settlement last year as too small and punitive toward shareholders, who were the victims in the case.