As Countrywide becomes Bank of America, the state of Florida isn't going to let an ownership change stop if from going after damages for what it claims were Countrywide's deceptive lending practices. The Sunshine State's Attorney General, Bill McCollum, told reporters, "There is technically a deep pocket. They've acquired them, they assume their liabilities."
Interestingly enough, after Bank of America filed its press release today with the SEC announcing that the acquisition had been completed, it followed up by filing Form S-8 POS ("POS"...interesting). Part of that form included a section on "Indemnification of Directors and Officers," which says, in part, that corporate law in Delaware allows a corporation to "have the power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative...because the person is or was a director, officer, employee or agent of the corporation...Such indemnity may be against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with such action, suit or proceeding, if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation and if, with respect to any criminal action or proceeding, the person did not have reasonable cause to believe the person's conduct was unlawful." (My emphasis.)
Then it adds that the SEC disagrees. "The Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable."
However, BofA says that in the event some current or former director tries to claim protection, the Bank is willing to take it to court to be decided if "such indemnification...is against public policy as expressed in the Securities Act," unless its own lawyers counsel otherwise.
But the S-8 POS also says the company "maintains a directors' and officers' insurance policy which insures the directors and officers of the Registrant against liability asserted against such persons in such capacity whether or not such directors or officers have the right to indemnification pursuant to the bylaws or otherwise." Meaning "we've bought some insurance just in case."
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