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Bank of America Corp. is firing back in an escalating feud with New York Attorney General Andrew Cuomo.
In a letter sent to Cuomo's office late Tuesday, the Charlotte bank said it was “surprised and disappointed” by accusations that it has hindered the attorney general's investigation of Merrill Lynch bonuses by invoking attorney-client privilege.
In a letter sent earlier on Tuesday, Cuomo's office demanded the bank stop invoking the privilege as it considers charges against bank executives. Among the issues Cuomo is investigating is whether the bank misled investors about Merrill bonuses in the proxy document sent to investors ahead of the Dec. 5 shareholder vote.
“First, the basic premise of the letter is simply wrong,” an attorney for the bank, Lewis Liman, wrote in the response. “Bank of America has not put at issue the subject matter of any advice of counsel. Nor has Bank of America offered reliance on legal advice as a justification for its disclosures. Bank of America's position has been clear and consistent throughout: the proxy statement and related disclosures complied with all applicable laws, rules and regulations.”
The bank said Cuomo's office based its letter on the testimony of Bank of America officials who were asked questions under oath by the Attorney General's office. In their responses, the executives said they relied on the advice of counsel. Bank of America itself, however, has not asserted a reliance on counsel as a defense, the letter stated.
The bank also defended its lack of disclosure of Merrill losses and the timeline around its attempt to back out of the deal in mid-December. No law required the bank to report private conversations with its regulators or intra-quarter results, the letter said. Forecasts of Merrill's losses were not appropriate for disclosure because the bank had already made extensive risk disclosures, the bank added.
The bank also said that while it sought advice from its general counsel at the beginning of December about whether a “material adverse event” had occurred that would allow it to get out of the deal, it was “uncontroverted” that the bank did not consider invoking the escape clause until mid-December – after the shareholder vote.
Bank of America also lashed out at Cuomo's office for refusing to meet with Bank of America's lawyers to discuss the investigation.
“We should note that we have repeatedly asked to meet with your Office to explain the relevant facts with respect to each of the matters the letter states are under investigation,” Liman wrote. “Each of those requests has been rejected. We do not understand your office's apparent refusal to meet with Bank of America's counsel and to hear Bank of America and Merrill Lynch's side of the story, including why there is no basis for seeking to invade the attorney-client privilege here.”
