BofA to Cuomo: The SEC Already Sued Us

Bank of America denied fraud allegations from New York Attorney General Andrew Cuomo and said the SEC is the only entity that can pursue the charges he brought.
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NEW YORK (

TheStreet

) -- In the latest twist regarding

Bank of America's

(BAC) - Get Report

long-running Merrill Lynch woes, the bank strongly denied the meat of fraud allegations from the New York attorney general regarding the two entities' high-profile merger.

Bank of America further contended that New York Attorney General

Andrew Cuomo doesn't have the jurisdiction to pursue his claims in the first place, saying that only the

Securities and Exchange Commission

has the right to pursue the claims that Cuomo filed in Feburary.

To that end, former CEO

Ken Lewis - whom Cuomo also charged with civil fraud, along with former CFO Joe Price - has asked a federal judge to dismiss Cuomo's claims and force him reimburse related legal fees.

"Mr. Lewis respectfully requests that this Court dismiss the Complaint on the merits; award costs, disbursements, and attorney's fees to him; and grant such other relief as the Court deems just and proper," said the embattled banker in what's known in court parlance as a "prayer for relief."

Bank of America

settled an SEC suit earlier this year, after a contentious, months-long court battle.

In that case, Judge Jed Rakoff

panned the SEC for what he characterized as a meager settlement whose structure didn't make much sense. The SEC raised the settlement price and restructured the terms in order to return $150 million to shareholders through a special dividend. Rakoff grudgingly approved that deal on Feb. 22.

The high-profile proceedings with the government are especially important for Bank of America, because a trial could lead to

piggyback lawsuits from jilted investors. An

array of litigious shareholders and other types of investors have coalesced in an effort to receive funds from the Merrill brouhaha.

In most cases, banks push to settle with regulators to avoid a fresh wave of private litigation. Banks tend to pay penalties that are relatively minor in the broad scope of their balance sheets, while regulators are able to claim victory over Wall Street -

as occurred with the SEC's charges against

Goldman Sachs

(GS) - Get Report

last month, once financial reform had passed.

For his part,

Cuomo has used heated rhetoric to allege that Bank of America lied to shareholders to get the Merrill deal approved, then lied to regulators to receive another $20 billion in federal assistance.

In a series of motions filed on Aug. 18, the Charlotte, N.C.-based banking behemoth points out that it returned those funds in less than a year, at more than a 15% return. It has also argued that the profits Merrill has delivered to the broader franchise have already outweighed large and unexpected at the time the deal closed in January 2009.

Both Lewis and Price denied allegations of impropriety as well, with the former CFO pointing out that Cuomo didn't bother to get his name right.

"Defendant Joe L. Price ("Price") (improperly named as Joseph L. Price in this lawsuit)" denied "all allegations, including headings and sub-headings," the motion said.

-- Written by Lauren Tara LaCapra in New York

.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.