Bank of America Loses Thain, Gains a Shareholder Suit

[WSJ_law_blog]

Merrill Lynch Chairman and CEO John Thain, left, and Bank of America Chairman and CEO Ken Lewis, Sept. 15, 2008. (AP)

There appears to be some serious fallout over last week’s news that BofA returned to the Fed’s rescue trough amid the realization that the fourth quarter losses of Merrill Lynch, it’s latest acquisition, were larger than expected.

Fallout A: Former Merrill CEO John Thain resigned today from BofA. A source told The Journal that BofA had lost confidence in Thain, after the bank’s CEO, Ken Lewis, learned of mounting fourth-quarter losses at Merrill from the transition team handling the Bank of America-Merrill merger rather than from Thain himself. And when Lewis asked Thain what happened, Lewis did not get a “good explanation for what was happening and why” the source told The Journal.

Fallout B is of the legal variety: We just received a press release announcing that Susman Godfrey lawyers have filed a class action lawsuit in the Southern District of New York, claiming that BofA and Merrill Lynch and their respective officers and directors made false and misleading statements in the proxy materials for the December 5 vote regarding the Merrill deal. The complaint alleges that the true nature of Merrill?s financial condition was not revealed even though Merrill and BofA knew or should have known of the large losses at Merrill Lynch. Here’s the complaint.

From Paragraph 48 of the complaint:

As reported in The Wall Street Journal, just three days after shareholders voted to approve the merger, on December 8, 2008, Merrill’s CEO John Thain addressed a meeting of Merrill’s Board of Directors. Thain reported that Merrill suffered significant losses in November, which Thain described as one of the worse months in Wall Street history. Despite the size of these losses, Thain told Merrill’s board the losses were in line with BOA’s estimates. Neither BOA nor Merrill, nor any of the Individual Defendants, ever disclosed any such estimates . . . to their shareholders in the Proxy Statement. Likewise, no loss estimates were disclosed in any subsequent filings.

A spokesperson for BofA did not immediately return a call seeking comment.

No wonder the Bank shares are tanking, You don’t know whether they are worth anything at all. Especially under the circumstance where every exec is lying whenever they open their mouths and make off with their loot.

SHAME ON CORPORATE AMERICA.

People such a Thain, Madoff, and numerous others on Wall Street are to blame for the current state of the economy. This is not a revolutionary statement. However, it needs to be repeated. Golden parachutes and stock incentives need to be eliminated from all publicly traded corporations.

Bringing a lawsuit is ridiculous. Even if they win, how are they going to collect any judgement? The bank is teetering on bankruptcy/insolvency.

China has executed two executives found responsible in the milk contamination scandel...

Chinese man gets death sentence in milk scandal (AP)

Is Ken Lewis sure about gatting involved with a China bank?

Oooooh, I love this! I was waiting for a good class action for the Thain BOA debacle in the making! Thain — talk about an unlikable witness! Now, anybody want an orange whip?