Raft of investigations plagues BofA

09/30/2009 9:40 PM

01/13/2010 8:35 PM

Bank of America and CEO Ken Lewis face a raft of investigations and other headaches from regulators and lawmakers. Most stem from the bank's purchase on Jan. 1 of struggling investment firm Merrill Lynch. The bank, which needed shareholder approval for the deal, is accused of failing to properly inform shareholders about losses at Merrill and bonuses paid to its employees. Some are also examining the government's involvement in the deal.

Here's a summary of what's coming next:

* The Securities and Exchange Commission: The SEC is expected to go to trial early next year over accusations that the bank didn't inform shareholders about Merrill bonuses. The bank denies the charges and says it is ready to litigate.

* New York Attorney General Andrew Cuomo: Cuomo says Lewis' resignation won't affect his investigation, which is ongoing. He is reportedly preparing to file civil charges against unspecified bank executives, and to subpoena the directors who served at the time of the Merrill purchase. (The N.C. attorney general is also examining the Merrill bonuses.)

* House Oversight and Government Reform Committee: The committee has already grilled Lewis, Federal Reserve chairman Ben Bernanke and former Treasury Secretary Henry Paulson. The committee is still working out a date for questioning FDIC chairwoman Sheila Bair, former SEC chairman Christopher Cox and current SEC chairwoman Mary Schapiro. A committee spokeswoman said Wednesday night that it hasn't been determined if Lewis will be called to testify again.

* Other investigations: The N.C. Attorney General's Office is also examining the Merrill deal. So are the FBI and the U.S. Justice Department, a knowledgeable source told the Observer in September.

* Shareholder lawsuits: Shareholders filed at least 30 lawsuits claiming they were misled into voting for the Merrill deal. A New York judge has consolidated the suits and appointed a set of pension funds from Ohio, Texas and Europe as lead plaintiff for complaints related to disclosure. Ohio Attorney General Richard Cordray said Wednesday night that the bank and its executives “still need to be held accountable for the harm done to investors and retirees."

* Consumer related: Though this isn't specific to Bank of America, it is facing a new, pro-consumer climate in the White House and Congress. Regulators and lawmakers are clamping down on overdraft fees, high interest rates on credit cards, and other consumer practices long considered commonplace.

Christina Rexrode

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