Yet another development in the saga of Ken Lewis, which everyone seems to have mostly forgotten now, who as a reminder is being sued by NY AG Andrew Cuomo, was just broken by Charlie Gasparino who claims that the former head of BofA is refusing to settle and will instead likely go to trial. In his lawsuit Cuomo alleges that Lewis violated civil securities laws by not alerting shareholders to the enormity of the losses prior to their vote. The cherry on top: Bernanke and Paulson will likely end up as defense witnesses - we wonder if the two will invoke the 5th against self-incrimination.
From Fox Business:
Former Bank of America CEO Kenneth Lewis has told his attorneys that he doesn’t want to settle civil charges brought by the New York Attorney General’s office that he failed to properly alert shareholders about upcoming losses in order to complete an ill-fated purchase of Merrill Lynch at the height of the financial crisis, FBN has learned.
Lewis has made his intentions clear to his legal team, headed by former U.S. Attorney for the Southern District, Mary Jo White, after Andrew Cuomo’s office offered to start settlement negotiations with the former CEO. Lewis left Bank of America at the beginning of the year amid various probes into the big bank’s purchase of struggling brokerage firm Merrill Lynch in the fall of 2008. BofA agreed to purchase Merrill the same weekend that Lehman fell into bankruptcy and sparked the most critical phase of the financial meltdown, leading the massive government bailout of the financial system.
FBN has learned that both Paulson and Bernanke may be called as witnesses by White if the case goes to trial, as Lewis now wants. That is, of course, unless the case gets dismissed, which White plans to file for at some point. No court date has been set.