Is Merrill Lynch Going to Go Bankrupt

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					ANDREW M. CUOMO                                  STATE OF NEW YORK                                     ERIC CORNGOLD
  Attorney General                                                                              Executive Deputy Attorney General
                                          OFFICE OF THE ATTORNEY GENERAL
                                                                                                   Division of Economic Justice

                                                                                                    DAVID A. MARKOWITZ
                                                                                                           Bureau Chief
                                                                                                    Investor Protection Bureau

                                                  December 7, 2009


         Lewis 1. Liman, Esq.
         Cleary, Gottlieb, Steen & Hamilton LLP
         One Liberty Plaza
         New York, NY 10006

                  Re:      Bank of America - Merrill Lynch

         Dear Lewis,

                 I write to follow-up on our conversation oflast Thursday concerning Mr. Curl's Martin
         Act testimony before this Office. As we have told you and your colleagues, we are seriously
         concerned that Mr. Curl has provided testimony that was intentionally or recklessly false.

                 Mr. Curl testified twice: (1) on April 10,2009, at a time when Bank of America refused
         to permit its employees and attorney to testify about the substance of attorney-client
         conversations that occurred; and (2) on November 11,2009, after the company had waived the
         privilege. Simply put, Mr. Curl's two testimonies are difficult to reconcile. In important and
         material ways, Mr. Curl appears to have changed his story once he recognized that he and Bank
         of America could not hide behind the attorney-client privilege.

             1.         The Purported December 3, 2008 Call to Edward Herlihy Regarding Disclosure

                        A. Mr. Curl's April Testimony

                  In his sworn testimony in April, Mr. Curl unequivocally described a call he had placed to

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Lewis J. Liman, Esq.
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Edward D. Herlihy, Bank of America's outside counsel, on or about December 3,2008, to obtain
legal advice concerning the decision to disclose publicly Merrill Lynch's fourth quarter-to-date
losses. When Mr. Curl testified in April, he believed that he would not have to describe the
substance of this purported conversation (in which only he and Mr. Herlihy participated) because
of the company's assertion of the attorney-client privilege. Mr. Curl also was aware that the very
fact of the conversation would be important to the Bank, and to the Bank's executives, in their
contention that they relied upon their lawyers in making the disclosure decisions.

       Q. I was going to start with the subject of the Wachtell conversation [... ]

       A. The subject of the Wachtell conversation was disclosure.

       [ ... ]

       Q. You're not going to answer if the disclosure was related to the financial condition of
       Merrill Lynch in the fourth quarter?

       MR. LIMAN: I'm going to instruct him not to answer.

       Q. Mr. Curl, are you not going to answer that question?

       A. Correct.

       Q. Why are you not going to answer my question?

       A. Advise [sic] of counsel.

       Q. When was this conversation with Wachtell?

       A. As I recall, it was around the 3rd of December -- 3rd of December.

       Q. December 3rd?

       A. Around there. I recall somewhere around there. The 3rd. Yes.

       Q. And who at Wachtell did you have that conversation with?

       MR. LIMAN: You could answer the question.

       A. Ed Herlihy.

       Q. Was there anyone else other than Ed?

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       A. Not that I remember. No.

       Q. And this was a telephone conversation?

       A. Yes.

       Q. Was there anyone on the call with you from Bank of America, or was it just yourself?

       A. No. Not that I recall.

       Q. Did you contact Ed, or did Ed contact you?

       A. I called Ed.

       Q. About the disclosure you were calling him about?

       A. About disclosure. Yes.

(Curl Testimony, 4/10/09 at 154-156.)

       B.           Mr. Curl's November Testimony

        However, when Mr. Curl testified a second time, in November, he insistently asserted
that he had no recollection of the December 3,2008 telephone call. Importantly, by the time of
his second sworn testimony, Bank of America had waived the attorney-client privilege. A
review of the documents that were newly provided to this Office indicated that there was no
record of the December 3, 2008 call, or of any private conversation between Mr. Curl and Mr.
Herlihy about disclosure. And Mr. Herlihy, who also testified before this Office, stated that no
such call had occurred.

       Mr. Curl's November testimony was dramatically different from his April testimony:

       Q. Did you have any other conversations regarding disclosure issues with Wachtell?

       A. Not that I recall. No.

       Q. Did you have any conversations regarding disclosure issues with Ed Herlihy?

       A. Not that I recall. No.

       [ ... ]

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        Q. Isn't it true that in your prior testimony you testified that you, in fact, discussed
        disclosure with Wachtell on December 3, 2008?

        A. I don't recall that. No.

         [ ... ]

        Q. How is it that in April you testified that you had a specific conversation with Mr.
        Herlihy about disclosure, and today you testified about none?

        A. I don't recall that conversation about disclosure. I

(Curl Testimony, 11/11/09 at 66-70.)

        Moreover, Mr. Curl's November testimony concerning his role generally with respect to
monitoring and handling the potential disclosure of Merrill's losses changed dramatically
between his first examination and his second, which took place after Bank of America waived
the privilege. In November, for the first time, Mr. Curl distanced himself from the disclosure
issue. In stark contrast to his earlier testimony in which he described personally calling Edward
Herlihy to discuss disclosure, Mr. Curl now testified: "Disclosure - I just don't think about that.
That's not part of my world." (Curl Testimony, 11/11/09 at 53.) Mr. Curl also testified that he
simply relied on Joseph Price, Bank of America's CFO, to handle disclosure issues:

        Q. What occurred in that conversation with Mr. Price?

        A. I just reminded Joe that -- you know -- I'm not an expert on disclosures; that's not
        something I deal with at all, but that I knew that he was checking with Mayopoulos and
        checking with Wachtell, as he had indicated in the first part of this conservation, and I
        just cautioned him that he should be very sure that he was receiving good legal advice
        from Tim and that he was paying attention to whatever the rules were, which, of course, I
        was not familiar with.

(Curl Testimony, 11/11/09 at 52.)

I Mr. Curl did describe a visit he made to Wachtell's offices in November 2008 in which he overheard - but did not
participate in - a conference call between Wachtell attorneys and a number of Bank of America personnel that
occurred in November 2008. As he testified, "I don't recall the specifics of it; 1 was not really a part of the
discussion - about disclosure." (Curl Testimony, 11/11/09 at II.) It is difficult to reconcile this accidentally
overheard conference call in mid-November 2008 with the one-on-one call Mr. Curl described in his earlier
testimony. Indeed, Mr. Curl himself made no attempt to do so.

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2.     Advice Regarding the Material Adverse Event Clause

        In April of this year, before the attorney-client privilege was waived, Mr. Curl testified
that after the merger agreement negotiation in September 2008, the MAC clause contained in the
Bank of America Merrill Merger agreement "reappeared in [his] life" for the first time on
"Friday the lih of December." (Curl Testimony, 4110/09 at 145.) However, after Bank of
America waived its attorney-client privilege, this Office was able to examine attorney notes that
indicated that Mr. Curl had, in fact, sought legal advice regarding the MAC clause on December

       In his second testimony, now aware that this Office had learned about his seeking legal
advice about the MAC clause before the shareholder vote, Mr. Curl provided a fanciful
explanation that he was asking about the MAC because he was concerned that Merrill might
invoke the MAC against Bank of America:

       Q. That was around Thanksgiving?

       A. I think it was right after Thanksgiving. [... ] there were two particular issues that I
       was concerned about, and Greg Fleming had called and wanted to have lunch with me. I
       think it was right after Thanksgiving. I think I had [... ] a conversation with Tim about
       whether or not Merrill Lynch had grounds to call a MAC or try to renegotiate the

(Curl Testimony, 11/11/09 at 26-27.)

       Despite having interviewed over forty witnesses in this investigation, including Mr. Curl
himself earlier in the year, this Office had heard nothing on this subject until Mr. Curl's
testimony in November. Moreover, Mr. Mayopoulos testified in detail that he provided advice
on whether Bank of America, not Merrill, could invoke the MAC.

       Mr. Curl recalled nothing of this. He recalled meeting with Mr. Price as well as Mr.
Mayopoulos on the MAC, but persisted in his version of events despite its illogicality given
Merrill's dire circumstances and need for the deal to ensure its survival:

       Q. What did you discuss with Mr. Price about the issue of Merrill Lynch possibly calling
       a MAC?

       A. As I recall, it was the same point: )J"umber one, there has been a stock price decline
       of some amount. Secondly, Bank of America was contemplating, as Joe had indicated to
       me, a common stock offering which would dilute the share of the resulting company that
       the Merrill Lynch shareholders would have. And that in the minds of a seller, just the
       optics of the nominal transaction value declining significantly, I was just beginning to

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      think about that, particularly given the fact that Fleming was coming to have lunch, that
      they might be looking at a possible MAC discussion.

      Q. What did Mr. Price say?

      A. As I recall, he didn't say much -- I don't recall him saying much.

      Q. What was Mr. Price's response to the items that you just testified about?

      A. That, A, it sounded like it was accurate. He seemed to agree with the fact that those
      are the factors, but he would depend on me to deal with a MAC if that issue arose. That's
      something that I did.

      Q. Did he indicate whether or not he thought Merrill would call a MAC?

      A. As I recall, no.

      Q. Did he indicate whether or not that would be a viable business move for Merrill

      A. As I recall, no.

      Q. Did he say anything along the lines in words or substance, If Merrill Lynch didn't
      have a merger partner it might go bankrupt in about a week or so?

      A. As I recall, no.

      Q. Did you, at the time, think Merrill Lynch could survive as a stand-alone entity?

      A. I don't remember thinking about that at all at that point in time.

      Q. Isn't that a relevant question to be thinking about when your [sic] wondering if a
      counterparty to a transaction is, in fact, going to call a MAC?

      A. Not particularly, no.

      Q. In the middle of a financial crisis you wouldn't think about how Merrill would fair if
      it litigated and successfully got out of the deal?

      A. Not at that point. Until they raised it with me I would not give any thought to it.

      Q. Why not? Why can't you give thought to it before they say it?

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       A. Tactically, I would wait to see if it was raised. Particularly that early, we were 45, 50
       days prior to closing, that would not be anything I would take a look at until the issue was
       on the table.

       Q. I'm not asking, tactically, if it was something you would discuss with them. I'm
       asking you if that's something you would think about. Why would you, tactically, not
       think about something -­

       A. I wouldn't be thinking about that at that point.

       Q. And why not?

       A. I don't think that would be something, at that point, that I would spend a lot of time
       thinking about. I would begin to think about probability or if they had some basis for
       calling it, and then if that becomes an issue, then we get into the tactical. But whether
       they should or shouldn't or could or couldn't -- that's the way I proceeded for a long

(Curl Testimony, 11/11/09 at 55-58.)

                                          *      *         *
       Please feel free to contact me if you have any questions regarding this matter.

                                       Very truly yours,

                                          !J(tV lOC/ 4 .
                                       David A. Markowitz
                                                               /~!{A- v!CC7
                                                                          !/f/.:    0/r      T T, C-"
                                       Chief, Investor Protection Bureau

            120 Broadway, New York, NY 10271   * Phone (212) 416-8222 * Fax (212) 416-8816
Lewis J. Liman, Esq.
Page 8 of8

cc     Mark F. Pomerantz, Esq.
       Edward P. O'Keefe, Esq.
       Michael J. Sharp, Esq.

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