Bank of America today announced a proposed $150-million settlement of a long-brewing regulatory complaint with the Securities and Exchange Commission (SEC). Meanwhile, New York Attorney General Andrew Cuomo filed a lawsuit against the bank, its former CEO Kenneth D. Lewis, and its former CFO Joseph L. Price.

The lawsuit, filed today in New York State Supreme Court, asserted that BofA failed to disclose massive losses at Merrill Lynch so that shareholders would vote to approve the merger.

“Bank of America, through its top management, engaged in a concerted effort to deceive shareholders and American taxpayers at large,” Cuomo said in a statement. “This was an arrogant scheme hatched by the bank’s top executives who believed they could play by their own set of rules. In the end, they committed an enormous fraud and American taxpayers ended up paying billions for Bank of America’s misdeeds.”

Settlement with the SEC

BofA’s settlement with the SEC encompasses two pending cases with the regulator. The first, which was set to go to trial in March, charged the bank with misleading investors over bonuses paid to Merrill Lynch executives before its acquisition by BofA (see “SEC Charges BofA $33M for Violations Related to Merrill Deal”). The second alleged that BofA failed to disclose extraordinary financial losses at Merrill Lynch prior to a shareholder vote to approve the merger (see “SEC Files another Suit against BofA”).

Under the terms of its proposed settlement with the SEC, BofA agreed to pay $150 million to its shareholders as a civil penalty. Furthermore, the bank agreed to other three-year conditions, including providing shareholders an annual “say on pay” advisory vote for the compensation of executives

The settlement is subject to approval from Judge Jed S. Rakoff, who rejected an earlier settlement (see “It’s a No-Go for BofA Settlement with SEC”).