Enforcement director Robert Khuzami testified about the SEC’s probe before the House Committee on Oversight and Government Reform. Rep. Dennis Kucinich (D-Ohio) pressed Khuzami on the $15.3 billion in fourth quarter losses, saying the committee has discovered evidence that BofA executives and lawyers knew or should have known about the potential losses in time to disclose them to shareholders before a vote on the merger.
“This is a test case, with industrywide implications, where what is at issue is the performance of attorneys in interpreting securities laws,” Kucinich said. He added that the bank’s in-house attorneys, as well as its outside counsel at Wachtell, Lipton, Rosen & Katz should have known the extent of the losses and should have ordered disclosure. (BofA general counsel Tim Mayopoulos, who says he tried to question the losses, was fired in mid-merger.)
