Now in Legal Rebels:
Posted Nov 17, 2009 01:08 pm CST
Bank of America’s former general counsel Timothy Mayopoulos says he was stunned when he learned last December that he was being fired as his employer was preparing to acquire Merrill Lynch.
Mayopoulos said no reason was given for his dismissal, and he still doesn’t know why it happened.
Since Mayopoulos’ firing, the Securities and Exchange Commission has filed a suit against Bank of America related to the acquisition, alleging a failure to notify shareholders of planned bonuses at Merrill. In prepared congressional testimony, Mayopoulos says he was axed just one day after he learned of bigger than expected losses at Merrill and asked to speak to the chief financial officer about his concerns.
Now the House Oversight and Government Reform Committee is investigating the government’s role in the merger and the shareholder disclosures by Bank of America.
In testimony prepared for the committee, Mayopoulos said he doesn’t recall having any role in deciding whether to disclose the bonuses, according to stories by Reuters, the Associated Press and Corporate Counsel. And he said he had advised that there was no legal basis to back out of the merger—advice that was contrary to the bank’s later assertion that there was reason to back out of the deal. The bank’s assertion led to an additional $20 billion in bailout funds, according to Corporate Counsel.
Original forecasts projected Merrill would lose about $5 billion in the fourth quarter. Mayopoulos became concerned that shareholders who approved the merger had been misled when the estimate was updated to a $9 billion loss, according to the Corporate Counsel account of his testimony.
The actual loss turned out to be $15.3 billion. Mayopoulos never got to meet with the CFO to express his concerns.
On Dec. 10, the bank’s chief risk officer told Mayopoulos he had to leave—immediately. A human resources representative asked him for his corporate ID, company credit card, office keys and BlackBerry.
“I got in my car and drove home. I was stunned,” Mayopoulos said in his testimony. ”I had never been fired from any job, and I had never heard of the general counsel of a major company being summarily dismissed for no apparent reason and with no explanation.”
Mayopoulos now has a new job as general counsel of Fannie Mae. His temporary replacement at Bank of America was Brian Moynihan, who also is scheduled to testify. Moynihan is a candidate to replace Bank of America chairman Ken Lewis.
ABAJournal.com: “B of A Officials Say Firing of GC Was Just a Corporate Downsizing”