While Bank of America CEO Ken Lewis is taking the fall for the sketchy acquisition of Merrill Lynch, maybe we should also be looking at the lawyers who advised him. The bank has agreed to release more documents on the controversial deal, including legal advice. And the bank says it followed its lawyers’ counsel. According to Breakingviews, things could get uncomfortable for the lawyers.
Exhibit A is the decision by Jed Rakoff, a federal judge in New York, to reject the $33 million settlement Bank of America had reached with the Securities and Exchange Commission over disclosures, or lack thereof, surrounding the Merrill deal, including potential bonus payments to the firm’s bankers. Simply put, he wanted names to be named. He also wanted to know more about the legal advice the bank had received.
Exhibit B is Andrew M. Cuomo, the New York attorney general. His opportunistic strikes, including threats to charge bank bosses including Mr. Lewis, have helped persuade the bank to make an about-face, the publication argues. For months, the bank insisted it wouldn’t release the legal advice it had relied on. This week, it decided it would.
Law firm Wachtell, Lipton, Rosen & Katz was the main advisor for the Merrill Lynch deal.
While there it is not clear whether Wachtell’s advice “departed from the norms of previous financial sector mergers” or that the bank’s in-house counsel acted outside of the scope of Wachtell’s advice, it would be a disaster if either of these scenarios turned out to be true.