Have you ever considered an extremely large purchase, say, a house, and then met with the real estate agent who wanted you to buy a condo with leaky faucets that couldn't be fixed?
That's sort of what happened when Bank of America's board met in September 2008 to approve the acquisition of an investment bank. That is, board members thought they were buying Lehman, but it turned out to be Merrill Lynch instead, according to a lawsuit filed by New York Attorney General Andrew Cuomo. The board of directors expressed surprise that it was Merrill, not Lehman, that BofA was considering. Afterward, however, the bank examined Merrill's books for only 25 hours before going through with the acquisition.
By the time the acquisition closed on Jan. 1, 2009, Merrill had accumulated billions in losses, a fact BofA didn't find necessary to disclose to shareholders. Instead, BofA had hired New York-based Wachtell, Lipton, Rosen & Katz, one of the best law firms in the U.S., to advise precisely on this matter. The lawyers told Joseph Price the bank needed to disclose the losses. After that, Wachtell was sent by the wayside.
Possibly the most surprising thing to come out of this saga is that many controversial and potentially incriminating stores of info were sent via e-mail. Don't bankers know by now to avoid the Internet if they're going to do something that might, you know, lead to a lawsuit?