Sizing up BofA's Privilege Waiver

In a letter to New York Attorney General Andrew Cuomo, BofA (and its lawyers at Cleary Gottlieb Steen & Hamilton and Paul, Weiss, Rifkind, Wharton & Garrison) informed Cuomo’s office that it would lift the privilege and turn over documents in regard to five specific areas of inquiry related to the Merrill deal, according to The New York Times. Insiders consider the move a sign that BofA is ready to settle with Cuomo’s office and the Securities and Exchange Commission, which was the first regulator to question whether BofA violated disclosure rules in public documents announcing the merger, according to the Wall Street Journal, which broke the waiver story Monday night.

The initial SEC inquiry concerned BofA’s alleged failure to properly disclose the fact that Merrill was about to pay up to $5.8 billion in executive bonuses. But our colleagues at Corporate Counsel now report the SEC will broaden its investigation to include when BofA found out about Merrill’s disastrous fourth-quarter losses and whether BofA tried to force its way out of the merger days before a shareholder vote. The privileged documents could show whether BofA executives violated disclosure rules on purpose, or, if they committed any violations at all, whether they did so accidentally by following advice of counsel, according to Corporate Counsel, an Am Law Daily sibling publication.