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Bank of America Shareholder Urges Board to Unmuzzle Former General Counsel
Corporate Counsel
October 09, 2009
A large shareholder at Bank of America Corp. is urging its board of directors to allow ex-general counsel Tim Mayopoulos to testify about the bank's merger with Merrill Lynch & Co. Inc. The shareholder also is asking the board to hire outside counsel to conduct an internal probe into the deal.
A Bank of America spokesperson did not return calls for comment.
Finger Interests Number One Ltd., controlled by the Finger family of Houston, filed a solicitation notice to shareholders on Wednesday with the Securities and Exchange Commission. The notice, which begins "Dear Institutional Shareholders," urges investors to contact the board of directors.
It states, "The Board must release former general counsel Tim Mayopolous to testify to (sic) Attorney General Cuomo so that the events surrounding the disclosure of facts prior to the shareholder vote on December 5, 2008, can be definitively settled."
New York Attorney General Andrew Cuomo has been investigating the bank's failure to disclose certain facts about Merrill's multibillion-dollar bonus pool and its mounting losses leading up to the Jan. 1 merger. Although Cuomo's office questioned Mayopoulos, he could not answer disclosure questions due to attorney-client privilege as well as a confidentiality agreement.
Cuomo has asked the bank to allow Mayopoulos and other in-house lawyers to answer investigators' questions. Specifically, investigators want to know what chief executive Ken Lewis and other bank executives told the lawyers, and how the lawyers responded.
Cuomo has threatened to charge executives.
The Finger family also says in the notice that the board should hire a special counsel to investigate the disclosure allegations.
"This will allow the company to eliminate the current distractions and move the company forward," the notice says. "For example, Deutsche Bank hired special counsel Cleary Gottlieb Steen & Hamilton earlier in 2009 to investigate allegations of management misconduct."
The family, which seeks Lewis' immediate resignation -- as opposed to his announced retirement in December -- owns more than 1 million shares of the bank. The family also urges the board to "fulfill its duty to shareholders and install a responsible and credible management team ... and pick a CEO from outside the company."
The board is considering Lewis' replacement, and two insiders have been mentioned as finalists, Greg Curl and Brian Moynihan. Both were right-hand men to Lewis, and Moynihan served as an interim general counsel for one month after Mayopoulos was fired -- for reasons the company will not discuss. The Finger family opposes Moynihan and Curl.
The two are "tainted" because they are part of the same management team that is under investigation by at least five separate governmental agencies, the notice states. "Regardless of who knew what and when, these senior managers would have had direct knowledge of the day-to-day operations and financial results of Merrill Lynch prior to the shareholder vote, yet none of them protested the disclosure failures or made any attempt to change the course of action by this management."
