Dear Wachtell Lipton: Meet Oncoming Freight Train; Bank Of America Waives Attorney-Client Privilege

A month ago Zero Hedge speculated that the SEC was preparing to throw Wachtell Lipton and Ed Herlihy at the wolves, in case its planned settlement to indemnify Ken Lewis of all sins failed. Well, it failed, now that a jury trial is in the works to determine just how guilty Ken Lewis et al have been of shareholder fraud. And, as expected, Wachtell Lipton is about to be run over by a 200 ton freight train.

The WSJ is reporting that not only is BofA completely changing its stance on attorney-client privilege (such a huge "ethical" sticking point previously), but that it will promptly hand over "troves of documents to the federal, state and Congressional officials who are investigating the Merrill purchase." One hopes, but doubts, that a case of obstruction of justice can one be made out of BofA's pathetic attempt at stalling and delaying the judicial case.

At the end of the day it is so nice of Ken Lewis to start the process of ratting out his closest accomplices and confidants. But with a prison sentence no longer out of the question, the man's true nature, full of integrity and milk of human kindness, finally shines through. Ken better avoid jail altogether or he will have quite an unpleasant time: at least Bernie Madoff did not rat anybody out.

From the WSJ:

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."

Perhaps it is time for a blustering Lewis Liman of Cleary Gottlieb to recant as well at this point? Let's not forget the lawyer's ever so insightful words to Andrew Cuomo: "We can only interpret your Office's allegations as reflecting a frustration that the truth does not fit its preconceived notions." Our advice to Cleary's lawyer for witty soundbites: he who is frustrated last is frustrated best. We sure hope Mr. Liman can agree.

And speaking of advice, we would like to suggest that Ed Herlihy picks his friends better. Especially as the current roster seems dead set on making every mistake postulated by John Nash in the classical prisoner's dilemma paradigm. The only question is who will actually end up being the real prisoner. Because at this point it is very likely that someone is going to jail.