Can You Sue Ken Lewis?
By paul.smalera
Created 02/01/2010 - 3:24pm
"Yes, but he will almost certainly never have to pay you."
One of the last public acts Kenneth Lewis performed before retiring as CEO of Bank of America [2] (BAC) was to forgo [3] his 2009 bonus and salary, thanks to the bank’s poor performance under his leadership. The main cause for Lewis’ docked pay was the questionable takeover of the severely ailing Merrill Lynch, also main reason for his early departure from the executive suite.
Soon after the shareholder vote affirming the deal, Bank of America was accused by two of its largest shareholders, the California teachers and public employees pension funds, of withholding materially adverse information about Merrill Lynch’s books from shareholders, the Federal Reserve, and the Treasury Department, in order to win the necessary approval. These omissions enraged the SEC and institutional shareholders, which have both filed lawsuits on the matter, Indeed, there is a long list of parties who have been aggrieved by BofA, almost a who’s who of losers in the financial crisis: mortgage-backed securities buyers, underwater homeowners, homeowners who have been wrongly foreclosed upon [4], banking customers angry about overdraft fees [5], privacy practices [6], the attorney general of Ohio [7], Hurricane Rita victims [8], and, well, the list goes on. The U.S. Party/Case Index, a database of nearly every federal lawsuit in the country, currently lists more than 5,000 lawsuits in which the Bank of America is a party.
There are also nearly 1,500 lawsuits in which a Kenneth Lewis is named. It’s reasonable to assume that a large majority of the 1,500 suits are indeed against that Ken. Lewis, even in his dotage, will likely be dealing with the legal fallout of his time at the helm for years to come. That’s why one of his last private acts at Bank of America was to set up a special insurance policy, purchased from AIG [9] (AIG) subsidiary Chartis, to protect him from being personally responsible for financial judgments related to his tenure as CEO. (Bank of America declined to comment on the policy, and AIG never returned our call.)
