Former Bank of America Chief Financial Officer Joe Price has reached a $7.5 million settlement with the New York attorney general’s office to resolve allegations related to the Charlotte bank’s 2009 Merrill Lynch acquisition, putting an end to the last major legal action lingering from the $50 billion deal.
The case was one of the more high-profile ones brought against an individual in the aftermath of the financial crisis.
Price had resisted settling, even after Bank of America and former CEO Ken Lewis reached a $25 million agreement last month. The New York attorney general had alleged that the bank and the two executives had misled investors about mounting losses at Merrill Lynch before the Charlotte bank acquired it in 2009.
“This settlement is one more step in our effort to hold top financial executives accountable for their actions,” New York Attorney General Eric Schneiderman said in a statement Friday.
Price, 53, also agreed not to serve as an officer or director of a public company for 18 months. The $7.5 million is not considered a fine but is instead partial compensation for the New York attorney general’s legal costs, said William Jeffress, Price’s attorney.
Bank of America, which declined to comment, will cover the cost of the payment, Jeffress said. The bank is also paying Lewis’ $10 million portion of last month’s settlement under an indemnification agreement.
Price “has always denied wrongdoing but has decided to settle without admitting any of the allegations in order to end the toll of litigation on him, his family and his career,” Jeffress said. “It is important to Joe that the settlement is a voluntary agreement on his part and does not involve a court order or finding of any sort.”
A UNC Charlotte graduate, Price joined the bank in 1993 from the accounting firm then known as PriceWaterhouse and rose to CFO in 2007. After Brian Moynihan became CEO in 2010, he became head of consumer banking before being pushed out in September 2011.
Price, who could not be reached for comment, has been helping Charlotte private equity firm Falfurrias Capital Partners evaluate potential financial services deals, said Marc Oken, who co-founded the firm with former Bank of America CEO Hugh McColl Jr.
“He agreed reluctantly to settle,” Oken said. “I think he is relieved to get it behind him.”
Lewis forged the deal to buy Merrill in September 2008 as the Wall Street icon verged on collapse at the peak of the financial crisis.
In the months that followed, billions of dollars in losses piled up at Merrill as market volatility roiled investment banks. But the mounting red ink was not disclosed to shareholders before they voted on the deal in December 2008. After the purchase closed in January 2009, the bank required a government bailout to shore up its shaky financial condition.
Former New York Attorney General Andrew Cuomo, now the state’s governor, first brought the civil charges against Bank of America, Lewis and Price in February 2010. Schneiderman, his successor, continued to press the case.
In other Merrill-related settlements, Bank of America in 2010 resolved a U.S. Securities and Exchange Commission probe for $150 million. In 2012, the bank settled a shareholder lawsuit for $2.43 billion. Staff writer Deon Roberts contributed.