Keep the heat on 'em, Rich!
From John Curry, August 30, 2010
Ohio AG Cordray to press pension claims against Wall St. banks, honchos on fraud, secret bonuses
Examiner.com, August 30th, 2010
AG Cordray to move forward aggressively to hold companies and executivves accountable. Photo: (Photo/John Michael Spinelli COLUMBUS, Ohio - Based on a ruling by a New York Federal District Court that denied motions by big Wall St banks like Bank of America, Merrill Lynch and some of their individual officers and directors to dismiss a lawsuit against them that included two Ohio retirement pension funds, Ohio Attorney General Richard Cordray said he is looking forward to developing evidence against the defendants.
According to a statement Monday on the ruling, Cordray, a Democrat running for a full four-year term against his Republican challenger, former Ohio U.S. Senator Mike DeWine, said, "The court's ruling is a major win not only for Ohio teachers, public employees and all Bank of America shareholders, but it also is a win for shareholders of every company and for our financial system."
Elected in 2006 as state treasurer, Cordray was appointed by Gov. Strickland to take over leadership of the AG's office in the wake of sex and management scandals that forced then-AG Marc Dann to resign his position.
Since becoming Ohio's top cop, Cordray has aggressively sought accountability of Wall Street institutions and executives who violated laws and harmed Ohio investors, workers, retirees and families. To date, Cordray has pursued nine major lawsuits including those against AIG, Bank of America, BP, Fannie Mae, Freddie Mac, Marsh, Merrill Lynch, the rating agencies and United Health Care.
Cordray said in prepared remarks that the court ruled that companies cannot pick and choose what they will tell their shareholders and will not be allowed to hide exorbitant bonuses and huge losses from their shareholders.
"We will continue to move forward aggressively with this action to hold these companies and executives accountable," he said.
To date, Cordray's office said, more than $2.7 billion has been recovered through these suits.
In his ruling U.S. District Court Judge P. Kevin Castel substantially denied the defendants' motions to dismiss the case. Consequently, his ruling clears the way for Ohio's pension funds and allied pension systems to move forward with their claims that the defendants committed securities fraud and issued false proxy statements.
If successful, the lawsuit could potentially recover billions of dollars for shareholders.
Lawsuit allegations, details
The lawsuit alleges that Bank of America, during merger negotiations, agreed to allow Merrill Lynch to pay up to $5.8 billion in accelerated year-end bonuses to its executives and employees, but failed to disclose that information to shareholders before they voted to approve the merger.
Additionally, in the two months before shareholders voted on the merger, Merrill Lynch suffered billions of dollars in losses. The complaint alleges that senior executives at both Merrill Lynch and Bank of America were aware of these massive losses but did not disclose the information to investors prior to the shareholder vote on the merger.
According to Monday's media release, Cordray's office said the court indicated that the following claims could proceed:
Securities fraud claims against Bank of America, Merrill Lynch and their respective CEOs, Ken Lewis and John Thain, for alleged misstatements related to the failure to disclose the agreement to pay up to $5.8 billion in discretionary bonuses, and against Ken Lewis and Bank of America for alleged omissions related to the bonus arrangement.
False proxy statement claims against Ken Lewis, John Thain, Bank of America, Merrill Lynch and certain Bank of America directors about the bonus arrangement.
False proxy statement claims against all defendants arising out of their failure to disclose Merrill's fourth quarter 2008 losses.
Liability claims against certain officers and directors for issues under their control.
Claims relating to false offering statements that misstated or omitted Merrill's bonus payments.
posted by Kathie Bracy at 2:09 PM
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