SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK
----------------------------------------------------------- XTHE PEOPLE OF THE STATE OF NEW YORK By ANDREW M. CUOMO, Attorney General of the State of New York,
Plaintiff,
-against-
BANK OF AMERICA CORPORATION, KENNETH D. LEWIS and JOSEPH L. PRICE,
Defendants.
:: : : : : : : : : : : :
----------------------------------------------------------- X
Index No. 450115/2010 ANSWER OF DEFENDANT BANK OF AMERICA CORPORATION
Pursuant to New York Civil Practice Law and Rules (“CPLR”) 3018,
Bank of America Corporation (“Bank of America”), by its undersigned attorneys, files
this Answer to the Complaint of the Attorney General of the State of New York (the
“Attorney General”) dated February 4, 2010. All allegations, including headings and
subheadings, not specifically admitted are hereby denied.
RESPONSES TO ALLEGATIONS OF THE ATTORNEY GENERAL
1. Bank of America contends that paragraph 1 contains no factual
allegations to which an answer can be given, and to the extent that any response to such
allegations is necessary, denies the allegations in paragraph 1, except admits that Bank of
America agreed to merge with Merrill Lynch & Co., Inc. (“Merrill Lynch”) in September
2008 (the “Merger”).
2. Bank of America denies the allegations in paragraph 2, except
admits that Bank of America agreed to merge with Merrill Lynch pursuant to an
agreement dated September 15, 2008 (the “Merger Agreement”); that the Merger was
FILED: NEW YORK COUNTY CLERK 08/18/2010 INDEX NO. 450115/2010NYSCEF DOC. NO. 6 RECEIVED NYSCEF: 08/18/2010
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announced on Monday, September 15, 2008; and that the proxy statement filed with the
Securities and Exchange Commission on November 3, 2008 (the “Proxy Statement”) was
mailed to shareholders on or about November 3, 2008, and refers to the Proxy Statement
for a true and complete statement of its terms.
3. Bank of America denies the allegations in paragraph 3.
4. Bank of America denies the allegations in paragraph 4, except
admits that on December 5, 2008, shareholders of Merrill Lynch voted to approve the
Merger and shareholders of Bank of America voted to authorize the issuance of shares
necessary to effect the Merger; that the Merger closed on January 1, 2009; and that
Merrill Lynch’s fourth quarter results for 2008 were timely released in accordance with
applicable law on January 16, 2009.
5. Bank of America denies the allegations in paragraph 5.
6. Bank of America denies the allegations in paragraph 6, except
admits that on certain dates after the announcement of the Merger in September 2008,
certain employees of Bank of America received certain preliminary, estimated, and
forecasted financial information relating to Merrill Lynch’s financial performance in the
fourth quarter of 2008.
7. Bank of America denies the allegations in paragraph 7, except
admits that on November 13, 2008, Timothy Mayopoulos, then Bank of America’s
General Counsel, and lawyers from Wachtell, Lipton, Rosen & Katz, among others,
discussed disclosure issues relating to Merrill Lynch’s financial performance in the fourth
quarter of 2008.
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8. Bank of America denies the allegations in paragraph 8, except
admits that on December 3, 2008, Joe Price and Kenneth Lewis participated in a
discussion relating to Merrill Lynch’s fourth quarter 2008 forecast, and that Mr. Price
received disclosure advice from Mr. Mayopoulos with respect to Merrill Lynch’s
financial performance in the fourth quarter of 2008.
9. Bank of America denies the allegations in paragraph 9, except
admits that Mr. Mayopoulos concluded that no additional disclosure beyond that already
made by Bank of America and Merrill Lynch was necessary.
10. Bank of America denies the allegations in paragraph 10.
11. Bank of America denies the allegations in paragraph 11, except
admits that the Bank of America Board of Directors met on December 9, 2008, that Mr.
Price provided summary financial information at the meeting, and that Mr. Mayopoulos
testified that he recalls a December 1, 2008 discussion with Mr. Price and Gregory Curl
at which the material adverse change (“MAC”) clause of the Merger Agreement was
discussed.1
12. Bank of America denies the allegations in paragraph 12, except
admits that Mr. Mayopoulos’s employment was terminated on December 10, 2008; that
Brian Moynihan, currently the Chief Executive Officer of Bank of America, became
General Counsel of Bank of America on December 10, 2008 after having held several
leadership positions at Bank of America and having practiced law for many years,
1 To the extent Bank of America refers to the testimony of witnesses interviewed by the Attorney
General in this Answer, such references should not be construed as a statement concerning the accuracy or completeness of the witness testimony as reflected in the transcripts produced by the Attorney General.
4
including as a partner at a well-respected law firm; and that Mr. Moynihan’s bar
membership status was inactive as of December 10, 2008.
13. Bank of America denies the allegations in paragraph 13, except
states that it lacks knowledge and information sufficient to form a belief as to the truth of
the allegations relating to advice that Deloitte & Touche LLP gave to Merrill Lynch prior
to the Merger, admits that on December 5, 2008, shareholders of Merrill Lynch voted to
approve the Merger and shareholders of Bank of America voted to authorize the issuance
of shares necessary to effect the Merger, and refers to the entirety of the testimony of
Thomas Graham and Jeffrey Brown for a true and complete understanding of its
substance.
14. Bank of America denies the allegations in paragraph 14.
15. Bank of America denies the allegations in paragraph 15, except
admits that in conversations with federal officials between December 17 and 21, 2008,
Bank of America executives stated that Bank of America believed it had grounds to
invoke the MAC clause of the Merger Agreement in light of the accelerating losses at
Merrill Lynch in the days following the shareholder vote.
16. Bank of America denies the allegations in paragraph 16.
17. Bank of America denies the allegations in paragraph 17.
18. Bank of America denies the allegations in paragraph 18.
19. Bank of America denies the allegations in paragraph 19.
20. Bank of America denies the allegations in paragraph 20.
21. Bank of America denies the allegations in paragraph 21.
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22. Bank of America denies the allegations in paragraph 22, except
admits that the Merger closed on January 1, 2009 and that Bank of America, along with
many other financial institutions, received funds through the Troubled Asset Relief
Program in October 2008 and January 2009.
23. Bank of America denies the allegations in paragraph 23, except
admits that Merrill Lynch paid its employees approximately $3.6 billion in aggregate
value of both cash and stock in the year-end variable incentive compensation program
(“VICP”) for 2008 and that the cash portion of such compensation was paid prior to the
closing of the Merger on January 1, 2009.
24. Bank of America denies the allegations in paragraph 24, and avers
that Bank of America and Merrill Lynch publicly disclosed, as part of the Proxy
Statement and elsewhere, the amount of overall compensation expense that Merrill Lynch
had accrued through the third quarter of 2008; that numerous media outlets, in
newspapers, on television, and over the internet, reported that Merrill Lynch was
expected to pay multi-billions of dollars in year-end incentive compensation for 2008;
and that the Proxy Statement expressly disclosed Merrill Lynch’s intention and/or
commitment to pay incentive compensation and to use its best efforts to retain key
employees.
25. Bank of America denies the allegations in paragraph 25.
26. Paragraph 26 states legal conclusions to which Bank of America
need not respond and/or allegations as to which Bank of America lacks knowledge and
information. To the extent any response to the allegations in paragraph 26 is necessary,
Bank of America denies them.
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27. Paragraph 27 states legal conclusions to which Bank of America
need not respond. To the extent any response to those allegations is necessary, Bank of
America denies them.
28. Paragraph 28 states legal conclusions to which Bank of America
need not respond. To the extent any response to those allegations is necessary, Bank of
America denies them.
29. Paragraph 29 states legal conclusions to which Bank of America
need not respond. To the extent any response to those allegations is necessary, Bank of
America denies them.
30. Paragraph 30 states legal conclusions to which Bank of America
need not respond. To the extent any response to those allegations is necessary, Bank of
America denies them.
31. Bank of America denies the allegations in paragraph 31, except
admits that it transacted business and maintained an office in New York between
September 2008 and January 2009.
32. Bank of America admits the allegations in paragraph 32.
33. Bank of America denies the allegations in paragraph 33, except
admits that Mr. Lewis was the Chairman and Chief Executive Officer of Bank of
America between September 2008 and January 2009.
34. Bank of America denies the allegations in paragraph 34, except
admits that Mr. Price was the Chief Financial Officer of Bank of America Corporation
between September 2008 and January 2009 and that Mr. Price reported directly to Mr.
Lewis during this time period.
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35. Bank of America denies the allegations in paragraph 35, except
admits that J. Steele Alphin was the Chief Administrative Officer of Bank of America
between September 2008 and January 2009.
36. Bank of America denies the allegations in paragraph 36, except
admits that Richard Alsop was in-house counsel at Merrill Lynch between September
2008 and the closing of the Merger.
37. Bank of America denies the allegations in paragraph 37, except
admits that David Belk was Senior Vice President of Bank of America’s Global
Corporate Strategy and Development group between September 2008 and January 2009
and previously worked in the Finance group.
38. Bank of America denies the allegations in paragraph 38, except
admits that Teresa Brenner was associate general counsel at Bank of America between
September 2008 and January 2009.
39. Bank of America denies the allegations in paragraph 39, except
admits that Mr. Brown was Bank of America’s Treasurer between September 2008 and
January 2009 and that Mr. Brown reported directly to Mr. Price during this time period.
40. Bank of America denies the allegations in paragraph 40, except
admits that Gary Carlin was Corporate Controller at Merrill Lynch between September
2008 and the closing of the Merger.
41. Bank of America denies the allegations in paragraph 41, except
admits that George Carp was the Business Finance Officer for Bank of America’s Global
Markets group between September 2008 and January 2009.
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42. Bank of America denies the allegations in paragraph 42, except
admits that Nelson Chai was the Executive Vice President and Chief Financial Officer of
Merrill Lynch between September 2008 and the closing of the Merger and that Mr. Chai
reported directly to John Thain during this time period.
43. Bank of America denies the allegations in paragraph 43, except
admits that Neil Cotty was Chief Accounting Officer of Bank of America between
September 2008 and January 2009.
44. Bank of America denies the allegations in paragraph 44, except
admits that Mr. Curl was the Vice Chairman of Corporate Development at Bank of
America between September 2008 and January 2009, that Mr. Curl’s responsibilities
during this time period included strategic corporate planning, that Mr. Curl reported to
Mr. Lewis during this period, and that Mr. Curl was one of the negotiators for Bank of
America during the Merger negotiations with Merrill Lynch.
45. Bank of America denies the allegations in paragraph 45, except
admits that Wachtell, Lipton, Rosen & Katz was retained by Bank of America to advise it
on legal issues related to the Merger and that Nicholas Demmo was a corporate partner at
Wachtell, Lipton, Rosen & Katz between September 2008 and January 2009.
46. Bank of America denies the allegations in paragraph 46, except
admits that John Finnegan was the Chairman of Merrill Lynch’s Management
Development and Compensation Committee (“MDCC”) between September 2008 and
the closing of the Merger.
47. Bank of America denies the allegations in paragraph 47, except
admits that Gregory Fleming was President of Investment Banking and Wealth
9
Management at Merrill Lynch between September 2008 and the closing of the Merger;
that, prior to the Merger, Mr. Fleming was responsible for Merrill Lynch’s investment
banking and wealth management divisions and for overseeing investor relations and
human resources; that Mr. Fleming was one of the negotiators for Merrill Lynch during
Merger negotiations with Bank of America; and that Mr. Fleming reported to Mr. Thain.
48. Bank of America denies the allegations in paragraph 48, except
admits that Charles K. Gifford was a member of Bank of America’s Board of Directors
between September 2008 and January 2009.
49. Bank of America states that it lacks knowledge and information
sufficient to form a belief as to the truth of the allegations in paragraph 49 concerning
Deloitte & Touche LLP, a third party, and avers that it is Bank of America’s
understanding that Mr. Graham was a partner at Deloitte & Touche LLP between
September 2008 and the closing of the Merger.
50. Bank of America denies the allegations in paragraph 50, except
admits that Christopher Hayward was Finance Director of Merrill Lynch between
September 2008 and the closing of the Merger and that Mr. Hayward reported to Mr.
Chai during this time period.
51. Bank of America denies the allegations in paragraph 51, except
admits that Wachtell, Lipton, Rosen & Katz was retained by Bank of America to advise it
on legal issues related to the Merger and that Ed Herlihy was a corporate partner at
Wachtell, Lipton, Rosen & Katz between September 2008 and January 2009.
52. Bank of America states that it lacks knowledge and information
sufficient to form a belief as to the truth of the allegations in paragraph 52 concerning
10
Deloitte & Touche LLP, a third party, and avers that it is Bank of America’s
understanding that Ven Kocaj was a partner at Deloitte & Touche LLP between
September 2008 and the closing of the Merger.
53. Bank of America denies the allegations in paragraph 53, except
admits that Thomas J. May was a member of Bank of America’s Board of Directors
between September 2008 and January 2009.
54. Bank of America denies the allegations in paragraph 54, except
admits that Mr. Mayopoulos was General Counsel of Bank of America between
September 2008 and December 10, 2008 and that Mr. Mayopoulos was one of the many
attorneys who advised Bank of America regarding the Merger.
55. Bank of America denies the allegations in paragraph 55, except
admits that certain employees of Bank of America received certain preliminary,
estimated, and forecasted financial information from Merrill Lynch, including from
Nancy Meloth, relating to Merrill Lynch’s financial performance in the fourth quarter of
2008; that Ms. Meloth was the Head of Financial Planning and Analysis in Merrill
Lynch’s Finance Department between September 2008 and the closing of the Merger;
and that she reported to Mr. Hayward during this time period.
56. Bank of America denies the allegations in paragraph 56, except
admits that David Moser was a Managing Director and Global Head of Accounting
Policy at Merrill Lynch between September 2008 and the closing of the Merger.
57. Bank of America denies the allegations in paragraph 57, except
admits that Mr. Moynihan was President of Global Corporate and Investment Banking
between September 2008 and December 10, 2008; that Mr. Moynihan was General
11
Counsel of Bank of America from December 10, 2008 to January 22, 2009; that Mr.
Moynihan became President of Global Banking and Global Wealth and Investment
Management on January 22, 2009; and that Mr. Moynihan is currently the Chief
Executive Officer of Bank of America.
58. Bank of America denies the allegations in paragraph 58, except
admits that Wachtell, Lipton, Rosen & Katz was retained by Bank of America to advise it
on legal issues related to the Merger and that Eric Roth was a litigation partner at
Wachtell, Lipton, Rosen & Katz between September 2008 and January 2009.
59. Bank of America denies the allegations in paragraph 59, except
admits that Andrea Smith was a Human Resources generalist who supported various
businesses within Bank of America, including the Global Corporate Investment Bank and
the CFO group, between September 2008 and January 2009.
60. Bank of America denies the allegations in paragraph 60, except
admits that Mr. Thain was President of Global Banking, Securities, and Wealth
Management at Bank of America from January 1, 2009 to January 22, 2009 and that Mr.
Thain was the Chairman and Chief Executive Officer of Merrill Lynch from September
2008 until the closing of the Merger.
61. Bank of America denies the allegations in paragraph 61, except
admits that certain Bank of America executives received certain preliminary, estimated,
and forecasted financial information relating to Merrill Lynch’s financial performance in
the fourth quarter prior to December 5, 2008.
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Bank of America denies the allegations in the first paragraph of footnote 1
to paragraph 61, except admits that Bank of America conducted due diligence on Merrill
Lynch on September 13 and 14, 2008.
Bank of America denies the allegations in the second paragraph of
footnote 1 to paragraph 61, except admits that Bank of America retained the services of
J.C. Flowers & Co. LLC in connection with the proposed Merger, and avers that Bank of
America and its employees and advisors conducted adequate due diligence prior to
entering into the Merger Agreement.
Bank of America denies the allegations in the third paragraph of footnote
1 to paragraph 61, except admits that Bank of America’s Board of Directors met on
September 14, 2008 to review the terms of the proposed Merger and approved the
Merger, and refers to the e-mail referenced in the third paragraph of footnote 1 to
paragraph 61 for a true and complete statement of its contents.
Bank of America denies the allegations in the fourth paragraph of footnote
1 to paragraph 61, except admits that Bank of America and Merrill Lynch agreed to a
stock-for-stock merger at a fixed exchange ratio of .8595 and that, based upon the market
value of Bank of America and Merrill Lynch common stock on September 12, 2008, the
price represented a 70 percent premium to the closing price of Merrill Lynch’s common
stock on September 12, 2008.
62. Bank of America denies the allegations in paragraph 62, except
admits that on November 13, 2008, General Counsel Timothy Mayopoulos consulted
with external counsel at Wachtell, Lipton, Rosen & Katz concerning any disclosure
13
obligation of Bank of America concerning Merrill Lynch’s preliminary, estimated, and
forecasted financial performance in the fourth quarter of 2008.
63. Bank of America denies the allegations in paragraph 63.
64. Bank of America denies the allegations in paragraph 64, except
admits that Ms. Meloth oversaw the forecasting process at Merrill Lynch, and refers to
the entirety of Ms. Meloth’s testimony for a true and complete understanding of its
substance.
65. Bank of America denies the allegations in paragraph 65, and refers
to the reports referenced in paragraph 65 for a true and complete statement of their terms.
66. Bank of America denies the allegations in paragraph 66, and refers
to the reports referenced in paragraph 66 for a true and complete statement of their terms
and to the entirety of Ms. Meloth’s testimony for a true and complete understanding of its
substance.
67. Bank of America denies the allegations in paragraph 67, except
states that it lacks knowledge and information sufficient to form a belief as to the truth of
any allegations concerning Merrill Lynch’s internal processes prior to the Merger, and
refers to the reports referenced in paragraph 67 for a true and complete statement of their
contents.
68. Bank of America denies the allegations in paragraph 68, except
admits that in the third quarter of 2008, Merrill Lynch carried goodwill on its books, and
avers that Bank of America and the market generally were aware that as a result of
accounting rules, Merrill Lynch’s historical goodwill would be written off upon the
closing of the Merger and that this was disclosed in the Proxy Statement.
14
69. Bank of America denies the allegations in paragraph 69.
70. Bank of America denies the allegations in paragraph 70, except
admits that certain employees of Bank of America received certain preliminary,
estimated, and forecasted financial information relating to Merrill Lynch’s financial
performance in the fourth quarter of 2008.
71. Bank of America denies the allegations in paragraph 71, except
admits that Ms. Meloth sent Messrs. Cotty, Carlin, and Hayward an e-mail dated
November 4, 2008 with the subject line “October month estimate on Nov 4” and that Mr.
Cotty forwarded this e-mail to Mr. Price on November 5, 2008, and refers to those e-
mails and the attachments thereto for a true and complete statement of their contents.
72. Bank of America denies the allegations in paragraph 72, except
admits that there is an e-mail from Mr. Cotty to Mr. Price dated November 9, 2008 with
the subject line “FW: Oct-08 PL Reports as of 11/7/08,” and refers to this e-mail for a
true and complete statement of its contents.
73. Bank of America denies the allegations in paragraph 73, except
admits that there is an e-mail from Ms. Meloth to Mr. Cotty dated November 12, 2008
with the subject line “4Q forecast,” and refers to this e-mail for a true and complete
statement of its contents.
74. Bank of America denies the allegations in paragraph 74, except
admits that on November 12, 2008, Mr. Price requested legal advice from Mr.
Mayopoulos regarding whether any disclosure of Merrill Lynch’s fourth quarter
performance was necessary and that Mr. Price and other Bank of America employees and
counsel, including Mr. Mayopoulos and Ms. Brenner, subsequently conferred regarding
15
any disclosure obligation of Bank of America relating to this information, and refers to
the entirety of Mr. Mayopoulos’s testimony for a true and complete understanding of its
substance.
75. Bank of America denies the allegations in paragraph 75, except
refers to the entirety of Mr. Mayopoulos’s testimony for a true and complete
understanding of its substance.
76. Bank of America denies the allegations in paragraph 76, except
admits that Mr. Mayopoulos consulted with external counsel, and refers to the entirety of
the testimony of Messrs. Mayopoulos and Roth for a true and complete understanding of
its substance.
77. Bank of America denies the allegations in paragraph 77, except
admits that Bank of America obtained disclosure advice from external counsel at
Wachtell, Lipton, Rosen & Katz and that Mr. Roth handled shareholder litigation by
Merrill Lynch shareholders challenging the Merger, states that it lacks knowledge and
information sufficient to form a belief as to the truth of any allegations concerning
communications that are solely internal to Wachtell, Lipton, Rosen & Katz, and refers to
Mr. Roth’s notes and the e-mail dated November 13, 2008 for a true and complete
statement of their contents.
78. Bank of America denies the allegations in paragraph 78, except
admits that Bank of America obtained disclosure advice from external counsel at
Wachtell, Lipton, Rosen & Katz, states that it lacks knowledge and information sufficient
to form a belief as to the truth of any allegations concerning communications that are
16
solely internal to Wachtell, Lipton, Rosen & Katz, and refers to Mr. Roth’s notes for a
true and complete statement of their contents.
79. Bank of America denies the allegations in paragraph 79, except
admits that Bank of America obtained disclosure advice from external counsel at
Wachtell, Lipton, Rosen & Katz, states that it lacks knowledge and information sufficient
to form a belief as to the truth of any allegations concerning communications that are
solely internal to Wachtell, Lipton, Rosen & Katz, and refers to the entirety of Mr. Roth’s
testimony for a true and complete understanding of its substance.
80. Bank of America denies the allegations in paragraph 80, except
admits that Mr. Mayopoulos participated in a telephone conference on November 13,
2008 with Ms. Brenner and Messrs. Roth, Demmo, and Herlihy, and refers to the entirety
of Mr. Mayopoulos’s testimony for a true and complete understanding of its substance.
81. Bank of America denies the allegations in paragraph 81, except
admits that Mr. Mayopoulos participated in a telephone conference on November 13,
2008 with Ms. Brenner and Messrs. Roth, Demmo, and Herlihy, and refers to the entirety
of Mr. Herlihy’s testimony for a true and complete understanding of its substance.
82. Bank of America denies the allegations in paragraph 82, except
admits that Mr. Mayopoulos participated in a telephone conference on November 13,
2008 with Ms. Brenner and Messrs. Roth, Demmo, and Herlihy and that Mr. Roth took
notes in the course of the telephone conference, and refers to Mr. Roth’s notes for a true
and complete statement of their contents.
83. Bank of America denies the allegations in paragraph 83, except
admits that Mr. Price attended a meeting on or about November 14, 2008 that was also
17
attended by certain employees of Merrill Lynch, among others, concerning Merrill
Lynch’s preliminary, estimated, and forecasted financial performance in the fourth
quarter of 2008 and conferred with Mr. Thain concerning whether Merrill Lynch believed
it appropriate to make an intra-quarter disclosure during the fourth quarter, and refers to
Mr. Roth’s notes of the November 13, 2008 telephone conference for a true and complete
statement of their contents and to the entirety of Mr. Price’s testimony for a true and
complete understanding of its substance.
84. Bank of America denies the allegations in paragraph 84, except
admits that Mr. Price conferred with Mr. Thain concerning whether Merrill Lynch
believed it appropriate to make an intra-quarter disclosure during the fourth quarter, and
refers to the entirety of Mr. Hayward’s testimony for a true and complete understanding
of its substance.
85. Bank of America denies the allegations in paragraph 85, except
admits that following the November 13, 2008 conversation, Mr. Mayopoulos, among
others, conducted an analysis of the disclosure-related issues raised by Bank of America,
and refers to the entirety of Mr. Mayopoulos’s testimony for a true and complete
understanding of its substance.
86. Bank of America denies the allegations in paragraph 86, and refers
to the entirety of Mr. Mayopoulos’s testimony for a true and complete understanding of
its substance.
87. Bank of America denies the allegations in paragraph 87, except
admits that Mr. Belk sent Messrs. Price, Curl, and Mayopoulos an e-mail dated
November 19, 2008 with the subject line “FW: Re: Analysis,” and refers to the e-mail
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and the attachment thereto for a true and complete statement of their contents and to the
entirety of the testimony of Messrs. Price and Mayopoulos for a true and complete
understanding of its substance.
88. Bank of America denies the allegations in paragraph 88, except
admits that on November 18, 2008, certain employees of Bank of America consulted with
counsel, including General Counsel Timothy Mayopoulos, concerning any disclosure
obligation of Bank of America concerning Merrill Lynch’s preliminary, estimated, and
forecasted financial performance in the fourth quarter of 2008, and refers to the entirety
of Mr. Mayopoulos’s testimony for a true and complete understanding of its substance.
89. Bank of America denies the allegations in paragraph 89, except
admits that Mr. Mayopoulos took notes during a November 18, 2008 meeting with Mr.
Price, among others, and refers to the notes of any such consultation for a true and
complete statement of their contents.
90. Bank of America denies the allegations in paragraph 90, except
admits Mr. Mayopoulos and Mr. Herlihy spoke by telephone on November 18, 2008 and
that Mr. Curl provided testimony before the Office of the Attorney General of the State of
New York (the “NYAG”) on several occasions, and refers to the entirety of Mr. Curl’s
testimony for a true and complete understanding of its substance.
91. Bank of America denies the allegations in paragraph 91.
92. Bank of America denies the allegations in paragraph 92, and refers
to the entirety of Mr. Herlihy’s testimony for a true and complete understanding of its
substance.
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93. Bank of America denies the allegations in paragraph 93, and refers
to the entirety of Mr. Roth’s testimony for a true and complete understanding of its
substance.
94. Bank of America denies the allegations in paragraph 94, except
admits that on November 20, 2008, Messrs. Price and Mayopoulos met in person, with
Messrs. Herlihy and Demmo attending by phone, and refers to the entirety of the
testimony of Messrs. Mayopoulos and Price for a true and complete understanding of its
substance.
Bank of America denies the allegations in footnote 2 to paragraph 94.
95. Bank of America denies the allegations in paragraph 95, and refers
to the entirety of Mr. Herlihy’s testimony for a true and complete understanding of its
substance.
96. Bank of America denies the allegations in paragraph 96.
97. Bank of America denies the allegations in paragraph 97, except
admits that on or about November 21, 2009, Mr. Price conferred with Mr. Thain
concerning whether Merrill Lynch believed it appropriate to make an intra-quarter
disclosure during the fourth quarter, and refers to the entirety of Mr. Price’s testimony for
a true and complete understanding of its substance.
98. Bank of America denies the allegations in paragraph 98, except
admits that on November 13, 2008, Mr. Price had a meeting with Messrs. Cotty,
Hayward, Carlin, and Moser, among others, during which a number of topics were
discussed and during which Mr. Moser made a presentation concerning Merrill Lynch’s
goodwill, and avers that Bank of America and Merrill Lynch publicly disclosed, as part
20
of the Proxy Statement and elsewhere, that Merrill Lynch would perform an impairment
test for goodwill in the fourth quarter of 2008, which might result in an impairment to
goodwill; that the determination to write down goodwill was made in connection with the
preparation, review, or audit of financial statements and was not required to be disclosed
until Merrill Lynch made its next periodic report to the SEC; and that Bank of America
and the market generally were aware that as a result of accounting rules, Merrill Lynch’s
historical goodwill would be written off upon the closing of the Merger and that this was
disclosed in the Proxy Statement.
99. Bank of America denies the allegations in paragraph 99, except
states that it lacks knowledge and information sufficient to form a belief as to the truth of
any allegations concerning Deloitte & Touche LLP, a third party, avers that Bank of
America and Merrill Lynch publicly disclosed, as part of the Proxy Statement and
elsewhere, that Merrill Lynch would perform an impairment test for goodwill in the
fourth quarter of 2008, which might result in an impairment to goodwill; that the
determination to write down goodwill was made in connection with the preparation,
review, or audit of financial statements and was not required to be disclosed until Merrill
Lynch made its next periodic report to the SEC; and that Bank of America and the market
generally were aware that as a result of accounting rules, goodwill would be written off
upon the closing of the Merger and that this was disclosed in the Proxy Statement, and
refers to the entirety of Thomas Kaylor’s testimony for a true and complete
understanding of its substance.
100. Bank of America denies the allegations in paragraph 100, states
that it lacks knowledge and information sufficient to form a belief as to the truth of any
21
allegations concerning Deloitte & Touche LLP, a third party, and refers to the entirety of
the testimony of Messrs. Moser and Carlin for a true and complete understanding of its
substance.
101. Bank of America denies the allegations in paragraph 101, except
admits that Mr. Moser sent to Mr. Chai and others an e-mail dated November 20, 2008
with the subject line “goodwill impairment” and that Merrill ultimately concluded that
the goodwill impairment for the fourth quarter would be approximately $2.3 billion, avers
that Bank of America and the market generally were aware that as a result of accounting
rules, Merrill Lynch’s historical goodwill would be written off upon the closing of the
Merger and that this was disclosed in the Proxy Statement, and refers to the e-mail
referenced in paragraph 101 for a true and complete statement of its contents.
102. Bank of America denies the allegations in paragraph 102, except
admits that Ms. Meloth sent Mr. Moser and Allen Sekler an e-mail dated November 20,
2008 with the subject line “FW: Nov qtd results per request,” and refers to the November
20, 2008 e-mail and the reports referenced in paragraph 102 for a true and complete
statement of their contents.
103. Bank of America denies the allegations in paragraph 103.
104. Bank of America states that it lacks knowledge and information
sufficient to form a belief as to the truth of any allegations in paragraph 104.
105. Bank of America states that it lacks knowledge and information
sufficient to form a belief as to the truth of any allegations in paragraph 105, and refers to
the entirety of Mr. Graham’s testimony for a true and complete understanding of its
substance.
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106. Bank of America denies the allegations in paragraph 106, except
admits that Mr. Moser raised the question of disclosure with Merrill Lynch’s in-house
counsel, and refers to the entirety of Mr. Moser’s testimony for a true and complete
understanding of its substance.
107. Bank of America denies the allegations in paragraph 107, but
admits that Mr. Moser sought legal advice on disclosure from Merrill Lynch in-house
counsel Richard Alsop.
108. Bank of America denies the allegations in paragraph 108.
109. Bank of America denies the allegations in paragraph 109.
110. Bank of America denies the allegations in paragraph 110, except
admits that Mr. Mayopoulos testified that he recalls a December 1, 2008 discussion with
Messrs. Price and Curl at which the MAC clause of the Merger Agreement was discussed
and that Mr. Price has a calendar entry reflecting a meeting with Messrs. Curl and
Mayopoulos on December 1, 2008, and refers to the entirety of Mr. Mayopoulos’s
testimony for a true and complete understanding of its substance.
111. Bank of America denies the allegations in paragraph 111, except
admits that Mr. Mayopoulos testified that he recalls a December 1, 2008 discussion with
Messrs. Price and Curl at which the MAC clause of the Merger Agreement was discussed
and that Mr. Price has a calendar entry reflecting a meeting with Messrs. Curl and
Mayopoulos on December 1, 2008, and refers to the entirety of Mr. Mayopoulos’s
testimony for a true and complete understanding of its substance.
23
112. Bank of America denies the allegations in paragraph 112, and
refers to the entirety of Mr. Price’s testimony for a true and complete understanding of its
substance.
113. Bank of America denies the allegations in paragraph 113, and
refers to the entirety of Mr. Curl’s testimony for a true and complete understanding of its
substance.
114. Bank of America denies the allegations in paragraph 114, except
admits that Mr. Curl testified before the NYAG on several occasions, and refers to the
entirety of Mr. Curl’s testimony for a true and complete understanding of its substance.
115. Bank of America states that the first sentence of paragraph 115
does not contain any factual allegations to which a response is necessary, and otherwise
denies the allegations in paragraph 115, including the allegations in the first sentence of
paragraph 115 to the extent any response to those allegations is necessary, and refers to
the entirety Mr. Thain’s testimony for a true and complete understanding of its substance.
116. Bank of America denies the allegations in paragraph 116, except
admits that Mr. Cotty sent an e-mail to Mr. Price on December 1, 2008, with the subject
line “ML Q4 forecast” containing preliminary, estimated, and forecasted financial
information regarding Merrill Lynch’s fourth quarter performance, and refers to this e-
mail for a true and complete statement of its contents.
117. Bank of America denies the allegations in paragraph 117, except
admits that Messrs. Thain, Lewis, Price, and Cotty met by telephone on or about
December 3, 2008 and that Mr. Chai testified that he recalls preparing Messrs. Thain and
24
Cotty for this telephone meeting, and refers to the entirety of Mr. Chai’s testimony for a
true and complete understanding of its substance.
118. Bank of America denies the allegations in paragraph 118, except
admits that there is an e-mail from Mr. Cotty to Mr. Thain dated December 3, 2008 with
the subject line “Plan and Forecast for today’s call…..I plan on sending to Joe at 2:30”
and that there is an e-mail dated December 3, 2008 from Mr. Cotty to Mr. Price
forwarding this e-mail, and refers to these e-mails for a true and complete statement of
their contents.
119. Bank of America denies the allegations in paragraph 119, except
admits that on December 3, 2008, Mr. Price received and made handwritten notes on a
report containing certain preliminary, estimated, and forecasted financial information
relating to Merrill Lynch’s financial performance in the fourth quarter of 2008, and refers
to the report referenced in paragraph 119 for a true and complete statement of its
contents.
120. Bank of America denies the allegations in paragraph 120, except
admits that the participants on the December 3, 2008 conference call discussed certain
preliminary, estimated, and forecasted financial information relating to Merrill’s financial
performance in the fourth quarter of 2008, and refers to the entirety of Mr. Cotty’s
testimony for a true and complete understanding of its substance.
121. Bank of America denies the allegations in paragraph 121, except
admits that a $3 billion contingency was incorporated into the December 3, 2008 forecast
during the evening of December 3, 2008 following a telephone conference that afternoon
between Messrs. Price and Lewis in Charlotte and Messrs. Thain and Cotty in New York
25
and that Mr. Price received and made handwritten notes on a copy of this December 3
forecast.
122. Bank of America denies the allegations in paragraph 122.
123. Bank of America denies the allegations in paragraph 123, except
admits that Mr. Mayopoulos considered the issue of disclosure in November 2008 and
concluded that no disclosure was required and that Mr. Mayopoulos testified on various
occasions before the NYAG and Congress, and refers to the entirety of Mr.
Mayopoulos’s testimony for a true and complete understanding of its substance.
124. Bank of America denies the allegations in paragraph 124, except
admits that Mr. Mayopoulos testified on various occasions before the NYAG and
Congress, and refers to the entirety of Mr. Mayopoulos’s testimony for a true and
complete understanding of its substance.
125. Bank of America denies the allegations in paragraph 125, except
admits that Mr. Mayopoulos testified on various occasions before the NYAG and
Congress, and refers to the entirety of Mr. Mayopoulos’s testimony for a true and
complete understanding of its substance.
126. Bank of America denies the allegations in paragraph 126, except
admits that Mr. Mayopoulos testified on various occasions before the NYAG and
Congress, and refers to the entirety of Mr. Mayopoulos’s testimony for a true and
complete understanding of its substance.
127. Bank of America denies the allegations in paragraph 127, except
states that it lacks knowledge and information sufficient to form a belief as to the truth of
any allegations concerning third parties, and admits that attorneys from Wachtell, Lipton,
26
Rosen & Katz have testified that they were not aware of the December 3, 2008 forecast
prior to the shareholder vote.
128. Bank of America denies the allegations in paragraph 128, except
admits that Mr. Curl testified on various occasions before the NYAG, and refers to the
entirety of Mr. Curl’s testimony for a true and complete understanding of its substance.
129. Bank of America denies the allegations in paragraph 129, except
admits that Mr. Curl testified on various occasions before the NYAG, and refers to the
entirety of Mr. Curl’s testimony for a true and complete understanding of its substance.
130. Bank of America denies the allegations in paragraph 130, except
admits that both Messrs. Curl and Herlihy testified on various occasions before the
NYAG, and refers to the entirety of their testimony for a true and complete understanding
of its substance.
131. Bank of America denies the allegations in paragraph 131, except
admits that on the morning of December 4, 2008, Mr. Cotty requested updated
information regarding the estimated results for November and that Mr. Hayward relayed
this request to Ms. Meloth.
132. Bank of America denies the allegations in paragraph 132, except
admits that Ms. Meloth sent an e-mail to Messrs. Cotty and Hayward and others on
December 4, 2008 at 11:43 a.m. attaching an updated forecast and related documents (the
“December 4 Report”) and that Mr. Cotty forwarded Ms. Meloth’s e-mail to Mr. Price
and others by e-mail on December 4, 2008 at 11:47 a.m., and refers to these e-mails and
the attachments thereto for a true and complete statement of their contents.
27
133. Bank of America denies the allegations in paragraph 133, and
refers to the December 4 Report for a true and complete statement of its contents.
134. Bank of America denies the allegations in paragraph 134.
135. Bank of America denies the allegations in paragraph 135, except
admits that on December 5, 2008, shareholders of Merrill Lynch voted to approve the
Merger and shareholders of Bank of America voted to authorize the issuance of shares
necessary to effect the Merger.
136. Bank of America denies the allegations in paragraph 136, except
admits that Mr. Carlin sent Mr. Cotty and others an e-mail on December 5, 2008 at 7:59
a.m., avers that that e-mail stated that “mark issues” were “still outstanding,” and refers
to that e-mail for a true and complete statement of its contents and to the entirety of Mr.
Hayward’s testimony for a true and complete understanding of its substance.
137. Bank of America denies the allegations in paragraph 137, except
admits that Mr. Brown testified before the NYAG, and refers to the entirety of Mr.
Brown’s testimony for a true and complete understanding of its substance.
138. Bank of America denies the allegations in paragraph 138, except
admits that Mr. Brown testified before the NYAG, and refers to the entirety of Mr.
Brown’s testimony for a true and complete understanding of its substance.
139. Bank of America denies the allegations in paragraph 139, except
admits that Mr. Price testified before the NYAG on various occasions, and refers to the
entirety of Mr. Price’s testimony for a true and complete understanding of its substance.
140. Bank of America denies the allegations in paragraph 140.
28
141. Bank of America denies the allegations in paragraph 141, except
admits that Bank of America referred to the first day of post-Merger operations as “Legal
Day One” and that, following the execution of the Merger Agreement, Bank of America
made efforts to synchronize Merrill Lynch’s closing process with Bank of America’s own
process, and states that it lacks knowledge or information sufficient to form a belief as to
the truth of the allegations regarding Merrill Lynch’s having called such efforts
“Accelerate the Close.”
142. Bank of America denies the allegations in paragraph 142, except
admits that Bank of America wanted Merrill Lynch to be able to close its books as fast as
Bank of America did, and refers to the entirety of Mr. Cotty’s testimony for a true and
complete understanding of its substance.
143. Bank of America denies the allegations in paragraph 143, except
admits that Mr. Carlin sent an e-mail to Mr. Cotty and others on the morning of
December 5, 2008, and refers to that e-mail for a true and complete statement of its
contents.
144. Bank of America denies the allegations in paragraph 144, except
admits that there was an e-mail exchange between Messrs. Cotty and Hayward on
December 5, 2008, and refers to these e-mails for a true and complete statement of their
contents.
145. Bank of America denies the allegations in paragraph 145.
146. Bank of America denies the allegations in paragraph 146.
Bank of America denies the allegations in footnote 3 to paragraph 146.
29
147. Bank of America denies the allegations in paragraph 147, except
admits that there is an e-mail from Ms. Meloth to Audrey Bommer and Mr. Fleming
dated December 6, 2008 at 2:11 p.m., on which Mr. Cotty and others are shown as having
been copied, with the subject line “Re: 2009 Budget – draft expense report” and an e-mail
from Ms. Meloth to Mr. Cotty forwarding this e-mail on December 6, 2008 at 5:12 p.m.,
and refers to these e-mails for a true and complete statement of their contents.
148. Bank of America denies the allegations in paragraph 148, except
admits that there is an e-mail from Mr. Carlin to Mr. Cotty dated December 7, 2008 with
the subject line “FW: Prelim Nov 08 P&L Reports (as of 12/5),” and refers to this e-mail
for a true and complete statement of its contents.
149. Bank of America denies the allegations in paragraph 149, except
admits that Bank of America held a meeting of its Board of Directors on December 9,
2008; that members of Mr. Price’s finance team, including Messrs. Cotty, Jeffrey Brown,
and Steve Brown, among others, assisted in the preparation of Mr. Price’s presentation to
the Bank of America Board of Directors; and that Mr. Cotty sent Mr. Thain an e-mail on
December 8, 2008 relating to Mr. Price’s presentation, and refers to this e-mail for a true
and complete statement of its contents.
150. Bank of America denies the allegations in paragraph 150, except
admits that on December 8, 2008, Merrill Lynch’s MDCC voted to pay Merrill Lynch’s
employees bonuses with an aggregate value of $3.6 billion, and that Mr. Cotty forwarded
to Mr. Hayward an e-mail from Patrick McNeely attaching the Daily Net Revenue Report
12.8.08 (5:15 Flash), and refers to these e-mails and the attachments thereto for a true and
complete statement of their contents.
30
151. Bank of America denies the allegations in paragraph 151, except
admits that the Bank of America Board of Directors met on December 9, 2008, and that
Mr. Price provided summary financial information at the meeting regarding, among other
things, Merrill Lynch’s projected financial performance for the fourth quarter of 2008,
and refers to the minutes of the meeting for a true and complete statement of their
contents.
152. Bank of America denies the allegations in paragraph 152, except
admits that the Bank of America Board of Directors met on December 9, 2008, and that
Mr. Price provided summary financial information at the meeting regarding, among other
things, Merrill Lynch’s projected financial performance for the fourth quarter of 2008,
and refers to the entirety of Mr. Price’s testimony for a true and complete understanding
of its substance.
153. Bank of America denies the allegations in paragraph 153, except
admits that the Bank of America Board of Directors met on December 9, 2008, that Mr.
Price provided summary financial information at the meeting regarding, among other
things, Merrill Lynch’s projected financial performance for the fourth quarter of 2008.
154. Bank of America denies the allegations in paragraph 154, and
refers to the entirety of the Mr. Mayopoulos’s testimony for a true and complete
understanding of its substance.
155. Bank of America denies the allegations in paragraph 155, and
refers to the entirety of Mr. Mayopoulos’s testimony for a true and complete
understanding of its substance.
156. Bank of America denies the allegations in paragraph 156.
31
157. Bank of America denies the allegations in paragraph 157, except
admits that on December 10, 2008, Mr. Mayopoulos was informed for the first time that
his employment had been terminated, that he was accompanied to the executive parking
garage by an HR executive, and that his personal effects were returned to him at a later
time.
158. Bank of America denies the allegations in paragraph 158, except
admits that Mr. Moynihan practiced law for many years, including as a partner at a well-
respected law firm; that Mr. Moynihan joined Bank of America in 2004 in connection
with Bank of America’s merger with FleetBoston Financial Corporation; and that Mr.
Moynihan held various leadership positions within Bank of America and was the head of
Global Corporate and Investment Banking shortly before being appointed General
Counsel to replace Mr. Mayopoulos in December 2008.
159. Bank of America denies the allegations in paragraph 159, except
admits that Mr. Moynihan practiced law for many years, including as a partner at a well-
respected law firm; that Mr. Moynihan joined Bank of America in 2004 in connection
with Bank of America’s merger with FleetBoston Financial Corporation; that Mr.
Moynihan held various leadership positions within Bank of America and was the head of
Global Corporate and Investment Banking shortly before being appointed General
Counsel to replace Mr. Mayopoulos in December 2008; and that Mr. Moynihan’s bar
membership status was inactive at the time he replaced Mr. Mayopoulos.
160. Bank of America denies the allegations in paragraph 160, except
admits that Mr. Moynihan was named General Counsel on December 10, 2008 and held
32
that position until he was named President of Global Banking and Global Wealth and
Investment Management on January 22, 2009.
161. Bank of America denies the allegations in paragraph 161, except
admits that Mr. Mayopoulos’s employment was terminated on December 10, 2008, and
refers to the entirety of Mr. Mayopoulos’s Congressional testimony for a true and
complete understanding of its substance.
162. Bank of America denies the allegations in paragraph 162.
163. Bank of America denies the allegations in paragraph 163, except
admits that Mr. Lewis provided testimony on various occasions before the NYAG, and
refers to the entirety of Mr. Lewis’s testimony for a true and complete understanding of
its substance.
164. Bank of America denies the allegations in paragraph 164, except
admits Mr. Lewis provided testimony before Congress, and refers to the entirety of Mr.
Lewis’s Congressional testimony for a true and complete understanding of its substance.
165. Bank of America denies the allegations in paragraph 165, except
admits that Mr. Curl provided testimony on various occasions before the NYAG, and
refers to the entirety of Mr. Curl’s testimony for a true and complete understanding of its
substance.
166. Bank of America denies the allegations in paragraph 166.
167. Bank of America denies the allegations in paragraph 167.
168. Bank of America denies the allegations in paragraph 168, and
refers to the entirety of Mr. Lewis’s testimony for a true and complete understanding of
its substance.
33
169. Bank of America denies the allegations in paragraph 169, and
refers to the entirety of Mr. Lewis’s testimony for a true and complete understanding of
its substance.
170. Bank of America denies the allegations in paragraph 170.
171. Bank of America denies the allegations in paragraph 171.
172. Bank of America denies the allegations in paragraph 172.
173. Bank of America denies the allegations in paragraph 173, except
admits that Ms. Meloth sent an e-mail to Mr. Cotty on December 11, 2008 at 6:17 p.m.
with the subject line “FW: Revenue Daily Pacing,” and refers to that e-mail and the
attachment thereto for a true and complete statement of their contents.
174. Bank of America denies the allegations in paragraph 174, except
admits that Ms. Meloth sent Messrs. Cotty and Hayward an e-mail dated December 12,
2008 with the subject line “Standard Forecast Report,” which attached a revised forecast
as of the close of business December 10, 2008, and refers to that e-mail and the
attachment thereto for a true and complete statement of their contents.
175. Bank of America denies the allegations in paragraph 175, and
refers to the entirety of the testimony of Messrs. Cotty and Hayward for a true and
complete understanding of its substance.
176. Bank of America denies the allegations in paragraph 176, and
refers to the entirety of Mr. Hayward’s testimony for a true and complete understanding
of its substance.
34
177. Bank of America denies the allegations in paragraph 177, and
refers to the entirety of Mr. Hayward’s testimony for a true and complete understanding
of its substance.
178. Bank of America denies the allegations in paragraph 178.
Bank of America denies the allegations in footnote 4 to paragraph 178.
179. Bank of America denies the allegations in paragraph 179.
180. Bank of America denies the allegations in paragraph 180, except
admits that Mr. Cotty provided the December 12, 2008 forecast to Mr. Price that
afternoon; that Mr. Price contacted Mr. Curl that afternoon to discuss that forecast; and
that Mr. Curl then requested that Wachtell, Lipton, Rosen & Katz analyze whether or not
Bank of America had grounds to invoke the MAC clause and that Wachtell, Lipton,
Rosen & Katz thereafter conducted such an analysis, and refers to the entirety of Mr.
Curl’s testimony for a true and complete understanding of its substance.
181. Bank of America denies the allegations in paragraph 181, except
admits that commencing on December 12, 2008 and for several days thereafter,
representatives of Bank of America, including, at certain times, Messrs. Lewis,
Moynihan, Price, and Curl, and representatives of Wachtell, Lipton, Rosen & Katz,
including Messrs. Herlihy, Roth, and Demmo, engaged in conversations concerning
whether or not Bank of America had grounds for invoking the MAC clause of the Merger
Agreement.
182. Bank of America denies the allegations in paragraph 182, except
states that it lacks knowledge and information sufficient to form a belief as to the truth of
any allegations concerning communications that are solely internal to Wachtell, Lipton,
35
Rosen & Katz, admits that Mr. Roth took notes of a conversation with Mr. Demmo on
December 14, 2008 in the course of his representation of Bank of America in connection
with the Merger, and refers to Mr. Roth’s notes for a true and complete statement of their
contents and to the entirety of the testimony of Messrs. Roth and Moynihan for a true and
complete understanding of its substance.
183. Bank of America denies the allegations in paragraph 183, except
admits that on December 15, 2008, Messrs. Demmo, Herlihy, and Roth participated in a
telephone conference with Messrs. Price and Curl, states that it lacks knowledge and
information sufficient to form a belief as to the truth of any allegations concerning
communications that are solely internal to Wachtell, Lipton, Rosen & Katz, and refers to
Mr. Roth’s notes for a true and complete statement of their contents.
184. Bank of America denies the allegations in paragraph 184, except
admits that Wachtell, Lipton, Rosen & Katz drafted talking points for Mr. Lewis and a
legal memorandum discussing the legal principles applicable to MAC disputes, and refers
to the documents referenced in paragraph 184 for a true and complete statement of their
contents.
185. Bank of America denies the allegations in paragraph 185, and
refers to the entirety of Mr. Lewis’s testimony for a true and complete understanding of
its substance.
186. Bank of America denies the allegations in paragraph 186, except
admits that during a telephone conference on December 15, 2008 among Messrs. Price,
Curl, Herlihy, Roth, and Demmo, there was discussion of renegotiating the Merger
36
Agreement and that Mr. Roth took notes during that telephone conference, and refers to
Mr. Roth’s notes for a true and complete statement of their contents.
187. Bank of America denies the allegations in paragraph 187.
188. Bank of America denies the allegations in paragraph 188, except
admits that during a telephone conference on December 17, 2008, management of Bank
of America considered, in consultation with its counsel, whether there may be grounds
for invoking the MAC clause of the Merger Agreement and that Mr. Roth took notes
during that telephone conference, and refers to Mr. Roth’s notes for a true and complete
statement of their contents.
189. Bank of America admits the allegations in paragraph 189.
190. Bank of America denies the allegations in paragraph 190, except
admits that Mr. Cotty sent Ms. Meloth an e-mail on December 16, 2008 at 8:07 p.m., and
refers to the e-mail referenced in paragraph 190 for a true and complete statement of its
contents.
191. Bank of America denies the allegations in paragraph 191, except
admits that Mr. Cotty sent Ms. Meloth an e-mail on December 16, 2008, and refers to the
e-mail referenced in paragraph 191 for a true and complete statement of its contents.
192. Bank of America denies the allegations in paragraph 192, except
admits that Messrs. Lewis, Price, and Moynihan met with Secretary Paulson and
Chairman Bernanke and other federal officials in Washington on the evening of
December 17, 2008 and that during this meeting, the participants discussed Merrill
Lynch’s financial condition and the invocation of the MAC clause.
37
193. Bank of America denies the allegations in paragraph 193, except
admits that at the December 17, 2008 meeting with federal officials, among other things,
one or more federal officials suggested that Bank of America pause before invoking the
MAC clause in order to allow federal officials to analyze the situation and requested
further information from Bank of America concerning Merrill Lynch’s financial
condition.
194. Bank of America denies the allegations in paragraph 194, except
admits that during the meeting in Washington on December 17, 2008 and in the days
following the meeting, Bank of America provided financial data concerning Merrill
Lynch’s fourth quarter forecast to Chairman Bernanke, including a report prepared by
Ms. Meloth as of the close of business December 10, 2008, which indicated that Merrill
Lynch was forecasting approximately $18 billion in total fourth quarter pretax losses, and
a document entitled “Merrill Lynch Summary of Legacy Exposure,” and refers to those
documents for a true and complete statement of their contents.
195. Bank of America denies the allegations in paragraph 195, except
admits that on or about December 18, 2008, Mr. Price advised federal officials that
Merrill Lynch’s fourth quarter forecast as of the close of business December 10, 2008 did
not reflect the impact of several additional items, totaling $3.6 billion, which included an
anticipated goodwill writeoff of $2.3 billion.
196. Bank of America admits the allegations in paragraph 196.
197. Bank of America denies the allegations in paragraph 197, except
admits that on December 18 and 19, 2008, management of Bank of America had further
discussions with federal officials concerning Merrill Lynch’s financial condition and the
38
possibility of Bank of America’s invoking the MAC clause of the Merger Agreement,
and refers to the entirety of Mr. Price’s testimony for a true and complete understanding
of its substance.
198. Bank of America denies the allegations in paragraph 198, except
admits that during the December 19, 2008 telephone conference with federal officials
including Secretary Paulson and Chairman Bernanke, Mr. Lewis stated that Merrill
Lynch’s fourth quarter losses were now forecasted to reach up to $21.4 billion pretax,
which would include the $2.3 goodwill impairment and other items.
199. Bank of America denies the allegations in paragraph 199, except
admits that during the telephone conference with federal officials on December 19, 2008,
Mr. Lewis discussed the options being considered by Bank of America, including
invoking the MAC clause, and that the parties discussed the possibility of completing the
transaction with federal financial assistance.
200. Bank of America denies the allegations in paragraph 200, except
admits that in a telephone conference with federal officials on December 19, 2008, Mr.
Roth discussed Bank of America’s potential grounds for invoking the MAC clause in the
Merger Agreement and that Ms. Brenner wrote an e-mail to Mr. Moynihan about the
conference, and refers to that e-mail for a true and complete statement of its contents.
201. Bank of America denies the allegations in paragraph 201, except
admits that Mr. Lewis had a telephone conversation with Secretary Paulson on December
21, 2008 and that Mr. Lewis’s talking points for the December 22, 2008 meeting of the
Bank of America Board of Directors reflect aspects of that conversation, and refers to
that document for a true and complete statement of its contents.
39
202. Bank of America denies the allegations in paragraph 202, except
admits that on or about December 19, 2008, Merrill Lynch informed its employees what
they would receive in VICP for 2008; that Merrill Lynch ultimately paid approximately
$3.6 billion in aggregate value of both cash and stock pursuant to the VICP for 2008; that
149 employees were awarded $3 million or more; that thirty-two employees were
awarded $6 million or more; and that fourteen were awarded $10 million or more.
203. Bank of America states that it lacks knowledge and information
sufficient to form a belief as to the truth of any allegations in paragraph 203, and
otherwise denies the allegations in paragraph 203.
204. Bank of America states that it lacks knowledge and information
sufficient to form a belief as to the truth of any allegations in paragraph 204, and
otherwise denies the allegations in paragraph 204.
205. Bank of America states that it lacks knowledge and information
sufficient to form a belief as to the truth of any allegations in paragraph 205, and
otherwise denies the allegations in paragraph 205.
206. Bank of America states that it lacks knowledge and information
sufficient to form a belief as to the truth of any allegations in paragraph 206, and
otherwise denies the allegations in paragraph 206.
207. Bank of America states that it lacks knowledge and information
sufficient to form a belief as to the truth of any allegations in paragraph 207, and
otherwise denies the allegations in paragraph 207.
40
208. Bank of America states that it lacks knowledge and information
sufficient to form a belief as to the truth of any allegations in paragraph 208, and
otherwise denies the allegations in paragraph 208.
209. Bank of America denies the allegations in paragraph 209, except
states that it lacks knowledge and information sufficient to form a belief as to the truth of
any allegations concerning the Federal Reserve.
210. Bank of America states that it lacks knowledge and information
sufficient to form a belief as to the truth of any allegations in paragraph 210, except
admits that during a telephone conversation with Mr. Lewis on December 21, 2008,
Secretary Paulson told Mr. Lewis that the Bank of America Board of Directors and senior
management could be removed in the event that Bank of America invoked the MAC
clause of the Merger Agreement.
211. Bank of America denies the allegations in paragraph 211, except
admits that Mr. Lewis provided testimony before the NYAG on various occasions, and
refers to the entirety of Mr. Lewis’s testimony for a true and complete understanding of
its substance.
212. Bank of America denies the allegations in paragraph 212, except
admits that Mr. Lewis provided testimony before the NYAG on various occasions, and
refers to the entirety of Mr. Lewis’s testimony for a true and complete understanding of
its substance.
213. Bank of America denies the allegations in paragraph 213, except
admits that Bank of America has a Code of Ethics, and refers to the Code of Ethics for a
true and complete statement of its contents.
41
214. Bank of America denies the allegations in paragraph 214.
215. Bank of America denies the allegations in paragraph 215, except
admits that on December 21, 2008, Mr. Lewis had a telephone conversation with
Chairman Bernanke in which Chairman Bernanke stated, among other things, that the
federal government would negotiate, between the time of the Merger closing and Bank of
America’s earnings announcement in January 2009, the terms of an agreement for federal
assistance in the form of a capital infusion and loss sharing.
216. Bank of America denies the allegations in paragraph 216, except
admits that Messrs. Lewis and Price testified before the NYAG on various occasions, and
refers to the entirety of their testimony for a true and complete understanding of its
substance.
217. Bank of America denies the allegations in paragraph 217.
218. Bank of America denies the allegations in paragraph 218, except
admits that Mr. Lewis testified before the NYAG on various occasions, and refers to the
entirety of Mr. Lewis’s testimony for a true and complete understanding of its substance.
219. Bank of America denies the allegations in paragraph 219, except
admits that Mr. Lewis testified before the NYAG on various occasions, refers to the e-
mail written by Mr. Lewis referenced in paragraph 219 for a true and complete statement
of its contents, and refers to the entirety of Mr. Lewis’s testimony for a true and complete
understanding of its substance.
220. Bank of America denies the allegations in paragraph 220, except
admits that Messrs. Lewis and Price testified before the NYAG on various occasions, and
42
refers to the entirety of their testimony for a true and complete understanding of its
substance.
221. Bank of America denies the allegations in paragraph 221, except
states that it lacks knowledge and information sufficient to form a belief as to the truth of
any allegations concerning Chairman Bernanke’s communications with the Federal
Reserve’s General Counsel.
222. Bank of America states that it lacks knowledge and information
sufficient to form a belief as to the truth of any allegations in paragraph 222.
223. Bank of America states that it lacks knowledge and information
sufficient to form a belief as to the truth of any allegations in paragraph 223.
224. Bank of America denies the allegations in paragraph 224, except
admits that on January 16, 2009, Bank of America issued a press release reporting, for the
quarter ending December 31, 2008, net losses of $1.79 billion, a diluted loss per common
share of $0.48, $15.31 billion in after-tax losses by Merrill Lynch, and the cutting of
Bank of America’s quarterly dividend to $0.01 per share, and refers to the January 16,
2009 press release for a true and complete statement of its contents.
225. Bank of America denies the allegations in paragraph 225, except
admits that, as disclosed in Bank of America’s January 16, 2009 press release, Merrill
Lynch reported credit valuation adjustments related to financial guarantor exposures of
$3.22 billion, a goodwill impairment of $2.31 billion, leveraged loan writedowns of
$1.92 billion, $1.16 billion in the U.S. Bank Investment Securities Portfolio writedowns,
and commercial real estate writedowns of $1.13 billion, and refers to the January 16,
2009 press release for a true and complete statement of its contents.
43
226. Bank of America denies the allegations in paragraph 226, except
admits that Bank of America directors Thomas May and Charles Gifford exchanged
several e-mails during the January 15, 2009 meeting of Bank of America’s Board of
Directors, and refers to those e-mails for a true and complete statement of their contents.
227. Bank of America denies the allegations in paragraph 227, except
states that it lacks knowledge and information sufficient to form a belief as to the truth of
any allegations concerning any third parties, admits that in January 2009, Moody’s and
Fitch downgraded the credit rating of Bank of America and that Bank of America’s stock
price declined at times in January 2009, and refers to the reports in which Moody’s and
Fitch downgraded the credit rating of Bank of America for a true and complete statement
of their contents.
228. Bank of America denies the allegations in paragraph 228, except
admits that Merrill Lynch paid its employees approximately $3.6 billion in aggregate
value of both cash and stock in VICP for 2008 and that the cash portion of the VICP was
paid before the year ended.
229. Bank of America denies the allegations in paragraph 229, except
admits that Merrill Lynch paid its employees approximately $3.6 billion in aggregate
value of both cash and stock in VICP for 2008, and avers that Bank of America and
Merrill Lynch publicly disclosed, as part of the Proxy Statement and elsewhere, the
amount of overall compensation expense that Merrill Lynch had accrued through the
third quarter of 2008; that numerous media outlets, in newspapers, on television, and over
the internet, reported that Merrill Lynch was expected to pay multi-billions of dollars in
44
year-end incentive compensation for 2008; and that the Proxy Statement expressly
disclosed Merrill Lynch’s intention and/or commitment to pay incentive compensation.
230. Bank of America denies the allegations in paragraph 230, except
admits that Merrill Lynch paid approximately $3.6 billion in aggregate value of both cash
and stock in VICP for 2008 and that Merrill Lynch paid VICP bonuses (both
discretionary and guaranteed) for 2008 of $3 million or more to 149 employees, thirty-
two of whom received $6 million or more and fourteen of whom received $10 million or
more, and avers that Bank of America and Merrill Lynch publicly disclosed, as part of
the Proxy Statement and elsewhere, the amount of overall compensation expense that
Merrill Lynch had accrued through the third quarter of 2008; that numerous media outlets
in newspapers, on television, and over the internet, reported that Merrill Lynch was
expected to pay multi-billions of dollars in year-end incentive compensation for 2008;
and that the Proxy Statement expressly disclosed Merrill Lynch’s intention and/or
commitment to pay incentive compensation.
231. Bank of America denies the allegations in paragraph 231.
232. Bank of America denies the allegations in paragraph 232, avers
that the criteria utilized by Merrill Lynch in determining compensation were fully
disclosed, and refers to the entirety of Mr. Finnegan’s testimony for a true and complete
understanding of its substance.
233. Bank of America denies the allegations in paragraph 233, avers
that the criteria utilized by Merrill Lynch in determining compensation were fully
disclosed, and refers to Merrill Lynch’s March 14, 2008 proxy statement for a true and
complete statement of its contents.
45
234. Bank of America denies the allegations in paragraph 234, avers
that the criteria utilized by Merrill Lynch in determining compensation were fully
disclosed, and refers to Merrill Lynch’s March 14, 2008 proxy statement for a true and
complete statement of its contents.
235. Bank of America denies the allegations in paragraph 235, and
refers to the entirety of Mr. Finnegan’s testimony for a true and complete understanding
of its substance.
236. Bank of America states that it lacks knowledge and information
sufficient to form a belief as to the truth of any allegations in paragraph 236, except
admits that on November 11, 2008, Merrill Lynch management presented to the MDCC a
calendar under which it was to review and approve bonus pools on December 8, 2008,
and refers to Mr. Finnegan’s testimony for a true and complete understanding of its
substance.
237. Bank of America denies the allegations in paragraph 237, except
admits that Mr. Lewis learned from Mr. Alphin that Merrill Lynch intended to pay certain
incentive compensation before the end of the year and that Mr. Lewis delegated
responsibility for discussions with Merrill Lynch relating to compensation to members of
Bank of America’s senior staff, including Mr. Alphin and Ms. Smith.
238. Bank of America denies the allegations in paragraph 238, except
admits that the Merger Agreement provided that the form and terms and conditions of the
long-term incentive awards granted under the VICP and the allocation thereof among
eligible employees was to be determined by Merrill Lynch in consultation with Bank of
America.
46
239. Bank of America denies the allegations in paragraph 239, except
admits that Bank of America exercised its right of consultation with respect to the
allocation of VICP awards among eligible employees, and refers to the entirety of Mr.
Thain’s testimony for a true and complete statement of its contents.
240. Bank of America denies the allegations in paragraph 240, except
admits that Merrill Lynch paid its employees approximately $3.6 billion in aggregate
value of both cash and stock in VICP for 2008, and refers to the entirety of Mr. Lewis’s
testimony for a true and complete understanding of its substance.
241. Bank of America states that it lacks knowledge and information
sufficient to form a belief as to the truth of any allegations in paragraph 241, and refers to
the entirety of Mr. Finnegan’s testimony for a true and complete understanding of its
substance.
242. Bank of America denies the allegations in paragraph 242, and
avers that Bank of America and Merrill Lynch publicly disclosed, as part of the Proxy
Statement and elsewhere, the amount of overall compensation expense that Merrill Lynch
had accrued through the third quarter of 2008; that numerous media outlets, in
newspapers, on television, and over the internet, reported that Merrill Lynch was
expected to pay multi-billions of dollars in year-end incentive compensation for 2008;
and that the Proxy Statement expressly disclosed Merrill Lynch’s intention and/or
commitment to pay incentive compensation.
243. Bank of America denies the allegations in paragraph 243, avers
that it is Bank of America’s understanding that the MDCC had not yet determined VICP
bonuses for 2008 at the time that Merrill Lynch provided its letters to the New York
47
Attorney General and the United States House Committee on Oversight and Government
Reform, and refers to these letters for a true and complete statement of their contents.
244. Bank of America denies the allegations in paragraph 244, except
admits that it is Bank of America’s understanding that Merrill Lynch informed its
employees of their 2008 VICP bonuses on or about December 19, 2008.
245. Bank of America denies the allegations in paragraph 245, and
avers that Bank of America and Merrill Lynch publicly disclosed, as part of the Proxy
Statement and elsewhere, the amount of overall compensation expense that Merrill Lynch
had accrued through the third quarter of 2008; that numerous media outlets, in
newspapers, on television, and over the internet, reported that Merrill Lynch was
expected to pay multi-billions of dollars in year-end incentive compensation for 2008;
and that the Proxy Statement expressly disclosed Merrill Lynch’s intention and/or
commitment to pay incentive compensation.
246. Bank of America denies the allegations in paragraph 246.
247. Bank of America admits the allegations in paragraph 247.
248. Bank of America denies the allegations in paragraph 248, except
admits that Mr. Lewis discussed the Merger during a press conference on September 15,
2008, and refers to the cited transcript of that press conference for a true and complete
statement of its contents.
249. Bank of America denies the allegations in paragraph 249, except
admits that Mr. Lewis discussed the Merger during a press conference on September 15,
2008, and refers to the cited transcript of that press conference for a true and complete
statement of its contents.
48
250. Bank of America denies the allegations in paragraph 250.
251. Bank of America denies the allegations in paragraph 251, except
admits that Mr. Lewis discussed due diligence during the September 15, 2008 press
conference, and refers to the cited transcript of that press conference for a true and
complete statement of its contents.
252. Bank of America denies the allegations in paragraph 252, except
admits that Messrs. Lewis and Price discussed due diligence during a conference call for
investors on September 15, 2008, and refers to the cited transcript of that investor
conference call for a true and complete statement of its contents.
253. Bank of America denies the allegations in paragraph 253, except
admits that Messrs. Lewis and Price discussed due diligence during a conference call for
investors on September 15, 2008, and refers to the cited transcript of that investor
conference call for a true and complete statement of its contents.
254. Bank of America denies the allegations in paragraph 254, except
admits that Messrs. Lewis and Price discussed due diligence during a conference call for
investors on September 15, 2008, and refers to the cited transcript of that investor
conference call for a true and complete statement of its contents.
255. Bank of America denies the allegations in paragraph 255, except
admits that Mr. Lewis discussed due diligence during a conference call for investors on
September 15, 2008, and refers to the cited transcript of that investor conference call for a
true and complete statement of its contents.
49
256. Bank of America denies the allegations in paragraph 256, and
refers to the cited transcript of the September 15, 2008 investor conference call for a true
and complete statement of its contents.
257. Bank of America states that it lacks knowledge and information
sufficient to form a belief as to the truth of any allegations in paragraph 257.
258. Bank of America denies the allegations in paragraph 258, except
admits that Bank of America conducted a secondary offering on October 7, 2008 in
which it raised approximately $9.76 billion and that Mr. Lewis participated in an earnings
call on October 6, 2008, and refers to the transcript of that call for a true and complete
statement of its contents.
259. Bank of America denies the allegations in paragraph 259, except
admits that Messrs. Lewis and Price participated in the October 6, 2008 earnings call, and
refers to the transcript of that call for a true and complete statement of its contents.
260. Bank of America denies the allegations in paragraph 260, except
admits that on November 3, 2008, Bank of America and Merrill Lynch filed the Proxy
Statement dated October 31, 2008 that sought, among other things, Merrill Lynch
shareholder approval of the Merger and Bank of America shareholder approval of the
issuance of shares of Bank of America common stock necessary to consummate the
merger; that the Proxy Statement contained Merrill Lynch’s unaudited interim earnings
up to June 27, 2008; that the Proxy Statement incorporated by reference various SEC
filings, including Forms 10-Q for the third quarter of 2008; and that Merrill Lynch’s 10-
Q disclosed a pretax loss from continuing operations of approximately $8.251 billion and
a net loss from continuing operations of approximately $5.12 billion during the third
50
quarter of 2008, and refers to the SEC filings cited in paragraph 260 for a true and
complete statement of their contents.
261. Bank of America denies the allegations in paragraph 261, except
admits that on November 4, 2008, Ms. Meloth sent an e-mail to Mr. Cotty, with a copy to
Messrs. Carlin and Hayward, annexi
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