Okay - so maybe Lewis did lie? Material Adverse Change ("MAC")

Okay - so maybe Wachtell is in the clear on the Merrill matter? Lewis' character took a nose-dive this morning (yeah - just this morning ...): the recently released privileged documents will require some clarification (but suggest Lewis "misled" federal officials).

To summarize what is alleged in the press as fibs or fib-related:

• Lewis told federal officials ("feds") he knew about the large Merrill 4Q losses in December. Documents released show BofA had been following the matter since October (suggesting he knew, or should have known).
• Lewis told the feds the material adverse change ("MAC") would trigger a clause in the Merrill transactional documents, allowing BofA to escape the deal. According to the Charlotte Observer, however, then BofA General Counsel Mayopoulos told BofA executives that the 4Q loss did not constitute a MAC. Recall, Mayopoulos was fired (days before Lewis told the feds about the MAC). FURTHER, Mayopoulos testified this week to the House Committee investigating BofA, and is rumoured to have testified to all of this. The Committee actually had another hearing scheduled today, but rescheduled so it could peruse the recently released privileged documents ...

Getting good yet?

• Lewis never told the feds about Mayopoulos' advice. (The merger agreement in fact contained language that Merrill's 4Q losses were not the type that would trigger a MAC).
• There are supplemental documents suggesting Lewis had to explain (defend?) a MAC issue at a board meeting.
• Lewis then gets on the phone with the feds (separately, with Paulson and then again with Bernanke) and suggests that with federal infusion of money, BofA will forgo escaping the deal (despite the MAC) and acquire Merrill.

Hat-tip: Law.com.

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