One of the leading candidates to take the helm at Bank of America has become embroiled in an investigation of the bank’s merger with Merrill Lynch.
The office of New York’s attorney general, Andrew M. Cuomo, has contacted several of the bank’s lawyers in the last two weeks with concerns about testimony given last month by Greg Curl, the bank’s chief risk officer.
The issue emerged just as Bank of America's board began a two-day meeting in Charlotte, N.C., where the bank is based, with the goal of appointing a new chief executive before Kenneth D. Lewis retires at year-end. The board has been torn over whether to name an internal candidate, like Mr. Curl, as its next chief, or an outsider unmarred by the Merrill deal.
Mr. Curl led the bank’s negotiations to take over Merrill during the financial crisis last year, and he remained involved in decisions related to the merger as it was presented to shareholders. Lawmakers and investigators have since criticized the bank for failing to disclose billions of dollars in losses at Merrill, and huge bonuses paid to Merrill executives, before shareholders approved the deal on Dec. 5.
Mr. Cuomo’s staff began questioning Mr. Curl about the disclosures in the spring, as the attorney general opened his investigation. The bank said it had relied on the advice of its attorneys, and Mr. Curl testified at the time about a phone conversation he had with a lawyer at Wachtell, Lipton, Rosen & Katz on Dec. 3 about the disclosure of Merrill’s losses, according to a person familiar with the matter.
The bank declined to disclose the content of conversations held with Wachtell, citing privacy privileges. Months later, the bank waived these privileges. But when it opened its legal records to Mr. Cuomo’s staff, no log emerged proving that the phone call cited by Mr. Curl had taken place, the person familiar with the matter said. Mr. Curl returned to Mr. Cuomo’s office in November and testified that he no longer remembered the call.
Lawrence Di Rita, a spokesman for Bank of America, said: “Mr. Curl provided his testimony on two occasions, several months apart, to the best of his recollections of events that had occurred as much as one year earlier. We are confident in the consistency and truthfulness of the Bank of America testimony.”
Mr. Curl, a longtime company executive, led negotiations on all of the bank’s recent mergers and is best known for his deal-making skills. In recent weeks, he represented the bank in its negotiations to return taxpayer money.
The bank expects to repay its $45 billion in bailout funds this week, after it raised nearly $20 billion in the private market last week. The bailout had been a stumbling block in the search for a chief, as some outsiders were wary of leading a bank still tethered to the government. Now, the bank’s board may reapproach some of those who were hesitant.
A person close to the board said some members knew about Mr. Cuomo’s concerns with Mr. Curl, but do not think they represent legal exposure for Mr. Curl.
Mr. Cuomo’s investigation — and several others — center on whether the bank should have disclosed more information about Merrill before shareholders voted to approve the deal on Dec. 5.
The subcommittee of the board hunting for a new chief is being advised by Edward D. Herlihy and other lawyers at Wachtell.