Filed in the Northern California District Court, this is the first class action suit to be brought against individual banking executives as a result of the banking crisis. As one plaintiff in the lawsuit, Ginny Culberston, said in an earlier media interview," I would like to see these greedy people on Wall Street take notice and know this won't be tolerated anymore."
The lawsuit claims that Merrill Lynch, handed out bonuses to its executives, totalling almost $4 billion, earlier than usual, and that Bank of America was aware of this. Merrill Lynch then reported a fourth quarter loss of $15.3 billion. Both banks later received federal aid as part of the Troubled Assets and Relief Program, also called TARP.
Investigations by the New York Attorney General's Office have revealed that Merrill Lynch secretly moved forward the date to allocate its bonuses, a date which had already been planned.
The lawsuit further alleges that John Thain and Ken Lewis withheld information from shareholders prior to a vote allowing Bank of America to purchase Merrill Lynch, that could have affected shareholders' decisions to buy or sell stocks. Shortly after the merger the real status of Merrill Lynch's financial situation became apparent, with share values dropping correspondingly. The suit claims that had investors known in advance, they would not have purchased shares.
The lawsuit states, "Defendant Lewis had the power to influence and control and did influence and control, directly or indirectly, the decision-making and actions of Bank of America, including the content and dissemination of the various statements which plaintiffs contend are false and misleading."