The simmering debate over the advice given by Wachtell Lipton Rosen & Katz in conjunction with the merger of Bank of America and Merrill Lynch took an unexpected turn this week when BofA agreed to waive attorney-client privilege in the SEC’s case against it. http://www.law.com/jsp/article.jsp?id=1202434494766
In a letter to David Markowitz of the Office of the New York Attorney General, Cleary Gottlieb’s Lewis Liman http://www.cgsh.com/lliman/ outlined five subject areas as to which BofA would waive the privilege for communications between Sept. 12, 2008 to Jan. 16, 2009: 1) disclosures to be made in or omitted from the joint proxy statement issued by BofA and Merrill in connection with their merger; 2) BofA’s consideration of whether to invoke the material adverse change clause of the merger agreement; 3) the public disclosure or non-disclosure of potential impairment of Merrill’s goodwill; 4) the public disclosure or nondisclosure before the merger closed of Merrill’s fourth quarter ’08 results; and 5) BofA’s communications with the Federal Reserve, Treasury Department and other government agencies in conjunction with its bailout.
The about-face came after BofA hired Paul Weiss chair (and Lawdragon 500 regular) Brad Karp, http://www.paulweiss.com/lawyers/detail.aspx?attorney=486, as well as Mark Pomerantz http://www.paulweiss.com/lawyers/detail.aspx?attorney=498 and Daniel Kramer http://www.paulweiss.com/lawyers/detail.aspx?attorney=128. They join a team of Cleary Gottlieb lawyers advising the bank. Paul Weiss will also join Wachtell advising on the securities class action over the bank’s failure to tell shareholders about billions of dollars set aside for bonuses before it merged with Merrill.
The waiver means that documents detailing Wachtell’s disclosure advice – which was made in a secret schedule not available to shareholders – will be given to the government. You can read American Lawyer’s August report on Wachtell’s dispute advice here http://www.law.com/jsp/tal/digestTAL.jsp?id=1202433286480&In_New_Briefs_SEC_Blames_Wachtell_and_Shearman__Sterling_for_Bank_of_Americas_Failure_to_Disclose_Merrill_Bonuses_but_BofA_Tells_Judge_Rakoff_There_Was_No_Failure_to_Disclose
Wachtell’s team was led by partner (and fellow Lawdragon 500 member) Ed Herlihyhttp://wlrk.com/Page.cfm/Thread/Attorneys/SubThread/Search/Name/Herlihy%2C%20Edward%20D.?CFID=1010308&CFTOKEN=93535576.
Judge Jed Rakoff rejected a $33 million settlement between BofA and the SEC.