Former Bank of America CFO Joe Price is barred from serving as an officer or director of a public company for the next 18 months as part of a $7.5-million settlement for his alleged role in deceiving the bank’s investors.
New York’s attorney general investigated Price for allegedly concealing and misrepresenting financial forecasts while Bank of America was looking to merge with Merrill Lynch in 2008, the attorney general’s office says.
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The attorney general alleges that Bank of America executives knew that Merrill Lynch was forecast to lose more than $9 billion, but didn’t tell their shareholders about it before they voted on the merger.
It also alleges that the bank’s former CEO, Kenneth Lewis, worked with Price to misrepresent the impact of the merger to shareholders.
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“Despite concealing these forecast losses from investors as immaterial, the bank then immediately sought massive financial assistance from the federal government, claiming that there had been a ‘material adverse change’ in Merrill’s financial condition over the previous three months,” says the attorney general’s office.
Allegedly, Bank of America continued to conceal Merrill’s forecast losses until mid-January 2009, when disclosure led to a $50 billion sell-off in shares of Bank of America.
Investors have received $2.4 billion in damages.