Bank of America and its former CEO Ken Lewis agreed Wednesday to pay $25 million to settle claims brought by the New York attorney general’s office that they misled investors on mounting losses at Merrill Lynch before the Charlotte bank acquired it in 2009.
Lewis, 66, is responsible for paying $10 million. He will also be barred from serving as an officer or director of a public company for three years. He does not admit wrongdoing in the settlement.
Bank of America is responsible for the other $15 million and must strengthen corporate governance in its board of directors.
An attorney for Lewis said he has made clear that Bank of America relied on expert legal advice throughout the Merrill Lynch acquisition.
“The Merrill Lynch acquisition has since proven to be an unmitigated success for Bank of America and its stockholders. Mr. Lewis is proud of the role he played in helping the U.S. banking system survive a very challenging period in its history,” attorney James F. Wyatt III said in a statement.
“Mr. Lewis is pleased to put this matter behind him and to move on with his life.”
A person familiar with the matter said Lewis decided to settle because the cost was covered by an indemnification agreement with the bank and he has no interest in serving as an officer or director of a public company.
The settlement brings to rest the last major legal action related to Bank of America’s acquisition of Merrill Lynch during the financial crisis. The bank announced the $50 billion deal in September 2008.
In the coming months, billions of dollars in losses piled up at Merrill as market volatility roiled investment banks. These losses were not disclosed to shareholders before they voted on the Merrill deal in December 2008.
Bank of America settled a shareholder lawsuit over the matter in 2012 for $2.43 billion.
The bank agreed to settle another lawsuit with investors for $20 million earlier that year. In 2010, Bank of America settled a U.S. Securities and Exchange Commission probe for $150 million.
Lewis stepped down as CEO in 2009, and he continues to live in Charlotte.
Former Chief Financial Officer Joe Price, 53, was also named in the New York attorney general’s action, but he is not a part of the settlement. Attorney General Eric Schneiderman’s office said it will continue its case against him.
“Joe Price made a different decision and we continue to defend the case,” attorney William Jeffress said.
Former Bank of America CFO Marc Oken said Price, a friend, is focused on his family. “He doesn’t want to spend time settling charges he doesn’t agree with.” Staff writer Rick Rothacker contributed.