BofA Loses Bid to Dismiss Derivative Suit Challenging Merrill Merger
By Andrew Longstreth
October 13, 2009
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Bank of America's hiring of Paul, Weiss, Rifkind, Wharton & Garrison and its decision to reveal details about the advice Wachtell, Lipton, Rosen & Katz gave about its merger with Merrill Lynch was certainly the biggest news to emerge about the bank Monday. But it wasn't the only news.Nearly lost was the refusal by Delaware Chancery Court vice-chancellor Leo Strine on Monday to dismiss a shareholder derivative suit against Bank of America directors over the Merrill merger. Here's Bloomberg's story. Plaintiffs in the case are seeking damages from former chairman Kenneth Lewis and other board members for allegedly failing to disclose their knowlege about Merrill's true financial condition and overpaying for the brokerage. At a hearing, Judge Strine, who has a penchant for the poetic, called the case a "stew of great complexity." Courtroom View Network has the hearing on video and is offering free clips, here.
According to Bloomberg, in court papers and at the hearing, Robert Kriner, Jr., of Chimicles & Tikellis, an attorney for the plaintiffs, argued that the BofA directors failed in their duties when they approved the merger with Merrill without disclosing the brokerage giant's mounting fourth-quarter losses.
Meanwhile, Lawrence Portnoy of Davis Polk & Wardwell, an attorney for the BofA directors, tried to downplay the losses, arguing that they were "not a secret" and were expected. Now it looks like he’ll have to make that argument at trial.
