Bank of America Corp
The pact, still subject to court approval, would allow the U.S. Securities and Exchange Commission to look at details on the bank's failure to disclose information to shareholders about Merrill's $15.8 billion fourth-quarter losses and about bonuses paid to the investment bank's employees.
Bank of America's board voted on Friday to waive its attorney-client privilege that protects the names of those who made decisions on the Merrill merger, according to sources familiar with the matter.
Congressional investigators as well as the New York Attorney General Andrew Cuomo will have access to the protected information, according to a letter the bank sent to Cuomo's office on Monday.
Bank of America faces an array of lawsuits and investigations by lawmakers and regulators. Cuomo has threatened to sue bank officers and is seeking more information on who knew what prior to the December 5 shareholder vote to approve the merger.
Sometime in the next week, the bank will be turning over a bunch of documents to the New York Attorney's Office that details what legal advice they received, said a source familiar with the matter.
Bank of America said it had nothing to hide.
Attorney-client privilege is a very important business principle, but given the pressure in several inquiries for further insight, we decided to waive it in this matter, said Bank of America spokesman Larry Di Rita.
We have nothing to hide and believe our actions throughout the Merrill Lynch acquisition were appropriate and in the best interest of our shareholders, he said.
Last month, a federal judge rejected Bank of America's $33 million settlement with the SEC, which alleged it misled investors about $3.6 billion of bonuses paid to Merrill employees.
U.S. District Court Judge Jed Rakoff faulted the SEC for accepting the bank's effort to invoke attorney-client privilege and avoid disclosing what executives and lawyers knew about its authorization to pay the bonuses.
If the pact is approved, the SEC would have access to information on the bank's decision not to disclose certain of Merrill fourth-quarter financial results, including impairment of goodwill.
The agreement would give the SEC access to the bank's communications with the Federal Reserve and the Treasury Department, which helped broker the deal and buttress the bank with taxpayer funds.
That would probably include communications between departing Bank of America CEO Ken Lewis, who was at the center of negotiations with federal regulators.
The order would allow the SEC to share the information from Bank of America with other government authorities, including federal and state regulators, the SEC said.
The bank announced at the end of last month that 62-year-old Lewis will retire by the end of the year. His reputation has been badly bruised by government investigations into the Merrill acquisition, as well as massive credit losses that led the bank to take two rounds of U.S. bank bailout funds.
Bank of America is searching for a successor with a view to appointing a replacement before Lewis leaves. Possible candidates include Brian Moynihan, head of consumer banking, and Joe Price, the bank's chief financial officer.
Lewis had previously said he wanted to stay at the bank until it had returned the $45 billion in government funds it received.
(Reporting by Rachelle Younglai in Washington and Elinor Comlay, Dan Wilchins and Joe Giannone in New York, editing by Dave Zimmerman and Lisa Von Ahn)