Proving that the non-disclosure of information to shareholders was predetermined and intentional, Kenneth Lewis admitted on sworn testimony that he had been advised by the bank’s law firm, as also by the chief financial officer that no such disclosure was necessary. So the admission proves that the top executives possessed the knowledge of Merrill’s losses and also that the determined not to disclose such information to the shareholders who would be voting to decide upon the purchase of Merrill.
The class-litigation also accuses Kenneth and his team of fraudulently misleading shareholders of Merrill’s losses and bonus payouts.
It is worthy to note that in a previous March 27 deposition by lawyers of shareholders, the same Chief Executive of the Bank of America resisted the insinuation that Bank of America had withheld material information before the Dec. 5 merger vote.
Hillary Sale, a law and management professor at the Washington University St. Louis School of Law told the media, “This deposition shows that before the actual shareholder vote, there was knowledge that the numbers were different. Call it large, call it substantial, but it is likely material.” The reason, added Sale, “In all cases of securities fraud the fight is always about who knew what, when…”
The bank spokesman, Lawrence Di Rita said “There is nothing new here … It was clear that Merrill Lynch’s deteriorating financial condition was widely appreciated by shareholders before voting for approval.” The bank also maintained that the plaintiff shareholders have failed to show that damages occurred as a consequence of “any alleged impairment to voting rights.”