Kenneth Lewis, who turned Bank of America Corp. into the nation's largest bank but also saddled it with enormous losses tied to mortgages, has settled a lawsuit accusing him of deceiving investors about one of his biggest acquisitions: Merrill Lynch & Co.
Lewis, the bank's chief executive from 2001 to 2009, will pay $10 million to resolve claims by New York Attorney General Eric Schneiderman that he misled shareholders and the government in order to complete the merger, which closed Jan. 1, 2009.
New York accused Lewis of concealing Merrill's mounting losses from Bank of America shareholders prior to a Dec. 5, 2008, vote on the merger, and manipulating the U.S. government into providing an extra $20 billion bailout by falsely claiming he would back out of the merger without the money.
As part of the agreement, Lewis, 66, is barred for three years from serving as an officer or director of a public company.
Bank of America will pay $15 million to resolve its portion of the suit, and will create a special committee to review large acquisitions. Both payments would cover the costs of Schneiderman's investigation, and neither Lewis nor the bank is admitting wrongdoing or paying damages.
But the settlement marks one of the rare times a bank executive has been held legally responsible in a case alleging wrongful conduct linked to the 2008 financial crisis.
A spokesman for Charlotte-based Bank of America, now the country's second largest, declined comment.-- Reuters