Bank of America ( BAC) shareholders took further action this week against its acquisition of troubled investment bank Merrill Lynch. High-profile investor Jerry Finger formally launched his campaign to strip CEO Ken Lewis's title as chairman of the board, and unseat two other board members, lead director O. Temple Sloan and chair of the asset-quality commission Jackie Ward. Finger's Houston-based investment firm, Finger Interests Number One, filed a notice of solicitation with the Securities and Exchange Commission on Monday, urging shareholders to vote against their re-election. Separately, two huge California pension funds filed suit against BofA, alleging that the firm "misstated or omitted" crucial information about Merrill Lynch when informing shareholders about the deal. California Public Employees' Retirement System (CalPERS) and California State Teachers Retirement System (CalSTRS) filed suit in the Southern District of New York on Monday. "Shareowners did not have complete or accurate information prior to approving the merger, and the failure of Bank of America to provide it sent the stock price down dramatically," CalPERS Board President Rob Feckner said in a statement . "Compounding the harm to shareowners was the fact that bonuses were paid to Merrill executives early and were not disclosed to shareowners prior to the merger." BofA is coming to terms with angry shareholders who have seen the value of their holdings plummet from above $55 a share as recently as 2006 to low-single-digits as the financial crisis exacerbated. Some say Lewis and BofA board members exercised poor risk-management skills in its hasty acquisition of Merrill last year, a deal which has come under scrutiny from New York Attorney General Andrew Cuomo as well.
BofA accepted an additional $20 billion to seal the Merrill deal as escalating losses -- totaling over $15 billion last quarter -- came to light. Merrill's unseemly decision to award executives with $3.6 billion in bonuses on an accelerated schedule just before the acquisition was complete has also brought BofA into the spotlight over how much it knew about the awards and when. BofA shares have recovered some value amid bullishness over the past week or so, closing up 26% to $7.80 on Monday. Shares were losing 3.7% to $7.51 in recent trading on Tuesday.