Letter from New York Attorney General's Office to Bank of America re Greg Curl

8/14/2019 Letter from New York Attorney General's Office to Bank of America re Greg Curl

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ANDREW M. CUOMO STATE OF NEW YORK ERIC CORNGOLDAttorney General OFFICE OF THE ATTORNEY GENERAL Executive Deputy Attorney GenerDivision of Economic JusticeDAVID A. MARKOWITZ

Bureau Chi efInvestor Protection Bureau

December 7, 2009

VIA ELECTRONIC MAILLewis 1. Liman, Esq.Cleary, Gottlieb, Steen & Hamilton LLPOne Liberty PlazaNew York, NY 10006

Re: Bank ofAmerica - Merrill LynchDear Lewis,

I write to follow-up on our conversation oflast Thursday concerning Mr. Curl's MartinAct testimony before this Office. As we have told you and your colleagues, we are seriouslyconcerned 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 ofAmerica refusedto permit its employees and attorney to testify about the substance of attorney-clientconversations that occurred; and (2) on November 11,2009, after the company had waived theprivilege. Simply put, Mr. Curl 's two testimonies are difficult to reconcile. In important andmaterial 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 Cal l to Edward Herlihy Regarding Disclosure

A. Mr. Curl's April TestimonyIn his sworn testimony in April, Mr. Curl unequivocally described a call he had placed to

120 Broadway, New York, NY 10271 * Phone (212) 416-8222 * Fax (212) 416-8816


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Lewis J. Liman, Esq.Page 2 of8Edward D. Herlihy, Bank of America's outside counsel, on or about December 3,2008, to obtainlegal advice concerning the decision to disclose publicly Merrill Lynch's fourth quarter-to-datelosses. When Mr. Curl testified in April, he believed that he would not have to describe thesubstance of this purported conversation (in which only he and Mr. Herlihy participated) becauseof the company's assertion of the attorney-cl ient privilege. Mr. Curl also was aware that the veryfact of the conversation would be important to the Bank, and to the Bank's executives, in theircontention 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 ofMerrill 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?

120 Broadway, New YorJc, NY 10271 * Phone (212) 416-8222 * Fax (212) 416-8816


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Lewis 1. Liman, Esq.Page 3 of 8

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 TestimonyHowever, 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 ofhis second sworn testimony, Bank of America had waived the attorney-client privilege. Areview of the documents that were newly provided to this Office indicated that there was norecord 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 nosuch 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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Lewis 1. Liman, Esq.Page 4 of8

Q. Isn't it true that in your prior testimony you testified that you, in fact, discusseddisclosure 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 tomonitoring and handling the potential disclosure of Merrill's losses changed dramaticallybetween his first examination and his second, which took place after Bank of America waivedthe privilege. In November, for the first time, Mr. Curl distanced himself from the disclosureissue. In stark contrast to his earlier testimony in which he described personally calling EdwardHerlihy to discuss disclosure, Mr. Curl now testified: "Disclosure - I jus t don't think about that.That' s not part of my world." (Curl Testimony, 11/11/09 at 53.) Mr. Curl also testified that hesimply 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 notsomething I deal with at all, but that I knew that he was checking with Mayopoulos andchecking with Wachtell, as he had indicated in the first part of this conservation, and Ijust cautioned him that he should be very sure that he was receiving good legal advicefrom Tim and that he was paying attention to whatever the rules were, which, of course, Iwas 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 notparticipate in - a conference call between Wachtell attorneys and a number of Bank of America personnel thatoccurred in November 2008. As he testified, "I don't recall the specifics of it; 1 was not really a part of thediscussion - about disclosure." (Curl Testimony, 11/11/09 at II.) It is difficult to reconcile this accidentallyoverheard conference call in mid-November 2008 with the one-on-one call Mr. Curl described in his earliertestimony. Indeed, Mr. Curl himself made no attempt to do so.120 Broadway, New York, NY 10271 * Phone (212) 416-8222 * Fax (212) 416-8816


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Lewis J. Liman, Esq.Page 5 of82. Advice Regarding the Material Adverse Event Clause

In April of this year, before the attorney-client privilege was waived, Mr. Curl testifiedthat after the merger agreement negotiation in September 2008, the MAC clause contained in theBank 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 ofAmerica waived its attorney-client privilege, this Office was able to examine attorney notes thatindicated that Mr. Curl had, in fact, sought legal advice regarding the MAC clause on December1,2008.In his second testimony, now aware that this Office had learned about his seeking legaladvice about the MAC clause before the shareholder vote, Mr. Curl provided a fancifulexplanation that he was asking about the MAC because he was concerned that Merrill mightinvoke 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 Iwas concerned about, and Greg Fleming had called and wanted to have lunch with me. Ithink it was right after Thanksgiving. I think I had [.. . ] a conversation with Tim aboutwhether or not Merrill Lynch had grounds to call a MAC or try to renegotiate thetransaction.

(Curl Testimony, 11/11/09 at 26-27.)Despite having interviewed over forty witnesses in this investigation, including Mr. Curlhimself earlier in the year, this Office had heard nothing on this subject until Mr. Curl'stestimony in November. Moreover, Mr. Mayopoulos testified in detail that he provided adviceon 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 givenMerrill'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 callinga MAC?A. As I recall, it was the same point: )J"umber one, there has been a stock price declineof some amount. Secondly, Bank of America was contemplating, as Joe had indicated tome, a common stock offering which would dilute the share of the resulting company thatthe Merrill Lynch shareholders would have. And that in the minds of a seller, just theoptics of the nominal transaction value declining significantly, I was just beginning to



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Lewis]. Liman, Esq.Page 6 of8

think about that, particularly given the fact that Fleming was coming to have lunch, thatthey 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 thoseare the factors, but he would depend on me to deal with a MAC if that issue arose. That'ssomething 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 MerrillLynch?A. As I recall, no.Q. Did he say anything along the lines in words or substance, IfMerrill Lynch didn'thave 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 acounterparty 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 ifit 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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Lewis J. Liman, Esq.Page 7 of8

A. Tactically, I would wait to see if it was raised. Particularly that early, we were 45, 50days prior to closing, that would not be anything I would take a look at until the issue wason the table.Q. I'm not asking, tactically, if it was something you would discuss with them. I'masking you if that's something you would think about. Why would you, tactically, notthink about something -A. I wouldn't be thinking about tha t 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 timethinking about. I would begin to think about probability or if they had some basis forcalling it, and then if that becomes an issue, then we get into the tactical. But whetherthey should or shouldn't or could or couldn't -- that's the way I proceeded for a longtime.

(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 . / ~ ! { A - v!CC7/f/.:0/rT T, C-"David A. Markowitz

Chief, Investor Protection Bureau



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cc

Lewis J. Liman, Esq.Page 8 of8

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


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Letter from New York Attorney General's Office to Bank of America re Greg Curl