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BofA Letter to NY Attorney General

BofA Letter to NY Attorney General

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02/22/2013

 
CLEARY
GOTTLIEB
STEEN
&
HAMILTON
LLP
ONE
LIBERTY
PLAZA
NEW
YORK,
NY
10006-1470
(21
2)
225-2000FACSIMILE
(212)
225-3999
WWW
CLEARYGOTTLIEB
COM
WASHINGTON
DC
*
PARIS
.
BRUSSELSLONDON
MOSCOW
.
FRANKFURT
.
COLOGNE
ROME
.MILAN
.
HONG
KONG
.
BEIJING
Writer's Direct
Dial
(212)
225-2550
E-Mail
Iliman~
cgsh
corn
September
8,
2009
BY
EMAIL
AND HAND
Eric
CorngoldDeputy Attorney GeneralOffice
of
the
AttorneyGeneral
-
New
York
120
Broadway23
dFloor
New
York, NY
10271
Re:
Bank
of
America
-
Merrill LynchDear
Mr.
Corngold:Today,
we
received
a
letter
from
DavidMarkowitz
of
your Office
complaining
that Bank
of
America's
invocation
of
the
attorney-client
privilege
was
hindering
the
New
York
Attorney
General's
ability
to
make
charging decisions
in
connection with your
Office'sinvestigation
of
the
Bank
of
America-Merrill
Lynch
merger.
Wewere
extremely surprised
and
disappointed
by
the
letter
for
several
reasons. Beforedelineating those reasons,
we
should
note
that
we
have
repeatedly asked
to
meet
with your Office
to
explaintherelevant
facts
with respect
toeach
of
the
matters
the
letter states
are
under investigation. Each
of
those requests
hasbeen
rejected.
We
do
not
understand
your
Office's
apparent refusal
to
meet with Bank
of
America's
counsel
and
to
hear Bank
of
America
and
Merrill
Lynch's
side
of
the story,
including why there
is
no
basis
for
seeking
to
invade
the
attorney-client
privilege
here.As to
the
other elements
of
the
letter,
there
are
several
important points
to
emphasize:
.-
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Eric
Corngold,
Esq.
Pg
etme
,20First,thebasic
premise
of
the
letter
is
simplywrong. Bank
of
America
has
not
put
at
issue
the
subjectmatter
of
anyadvice
of
counsel.Nor
has
Bank
of
America
offeredreliance
on
legal
advice
asa
justification
for
its
disclosures.Bank
of
America's
position
has
been clear
and
consistent
throughout:
the
Proxy Statement
and
related disclosurescomplied
with
all
applicable
laws,
rules
and
regulations.BecauseBank
of
America
did not
violate
the law,
it
has
not
offered reliance
onlegal
advice
as a
defense.Second,
we have
been cooperatingextensively withyour
Office's
investigation
and have
done
so
consistent
with
the
existing policiesendorsed
by
the federal
government,
as
well
as
the
bar
associations
of
New
York
Stateand
numerous other
States,
which
make
clear
that
waiver
of
the
attorney-client
privilege
is
not
a
necessaryelement
of
effectivevoluntarycooperation. Thosepolicies include
U.S.
Department
of
Justice guidelines
on
cooperation
published
in
August
2008,
as
well
as
the
policies
setout
in
a
bill
passed
bythe
U.S.
House
of
Representatives
in
2007 and
a
similar
bill
introduced
in
theSenate
in
2009.'
They
also include
the
policies
of
the
Securities
and
ExchangeCommission.
2
These policiesuniformlyadmonish
against
seeking waiver
of
the
attorney-clientprivilege
in an
investigation
in all
but
the
most
extreme
circumstances.Third,
the
entirepremise
of
the
letter
relies
on
questions
asked
of
Bank
of
America
and
MerrillLynchemployees
who were
under subpoena-specifically,whethertheyrelied
on
counsel's
advice.Those
witnesses'
truthfulresponses
that
they
did
is
thesole
basis
for
asserting
that Bank
of
America
somehow
is
taking unfair advantage
of
the
privilege.
That
suggestion
is
entirely unfounded.
As
you
are
no
doubt
aware,the
doctrine
that
the
letter
relies
upon
is
based
on
the
concernthat
"it
would
be
unfair
for
a
party asserting
[a
contention that
it
relied
on
counsel]
to
an
adjudicatingauthority
to
then
rely on
its
privileges
to
deprive
its
adversary
of
access
to
materialthat mightdisprove
or
undermine the
party's
contentions."
JohnDoe
v.
United
States,
350
F.3d
299,302 (2d Cir.
2003)?3
See.
e.g.,
United
States
Attorneys'
Manual,
Principles
of
Federal
Prosecution
of
Business Organizations
§§
928.7
10-720
(revised August
28,
2008)
("waiving
the
attorney-client
and
workproductprotections
has
never
been
a
prerequisite under
the
Department's
.
guidelines
for
a
corporation
to
be
viewed
as
cooperative");Attorney-ClientPrivilegeProtection
Act
of
2009,
S.
445,
1
11th
Cong.
(2009)(proposingthat
language
similar
to
that
of
the
August
28,
2008
UnitedStates
Attorneys'
Manual
on
the issue
of
privilege waiver
be
adopted
as
federallaw);
Attorney-Client PrivilegeProtection
Act
of
2009,
H.R.
3013,
11
1th
Cong (2007) (finding
that
prosecutors
and
investigators"have
been
able to,
and can
continue
to,
conducttheir
work
whilerespectingattorney-client
and
work
productprotections
andthe
rights
of
individuals,including seeking
and
discovering
factscrucial
to
the
investigation
and
prosecution
of
organizations").
2
See
Securities
and
ExchangeCommission
Division
of
Enforcement,Enforcement Manual,
pp.
98-99(October
6,
2008) ("The
staff
mustrespectlegitimateassertions
of
the
attorney-clientprivilege
and
attorney
work
productprotection
The
staff
should
notask
a
party
to
waivethe
attorney-client
or
work
product privileges
and
is
directed
not
to
do
so.
.
Waiver
of
a
privilege
is
not
a
pre-requisite
to
obtainingcredit
for
cooperation.").
3See
also,Veras
Investment
Partners.
LLC
v.
Akin
Gump StraussHauer
&
Feld LLP,860
N.Y.S.2d
78,82
(1
st
Dep't
2008) ("The privilege
is
waived
where
a
partyaffirmatively
placesthe
subject matter
of
its
own
privileged
communications
at
issue
in
litigation,
so
that
invasion
of
the
privilege
is
required
to
determine
the
validity
of
the
party's
claim or
defense,
and
application
of
the
privilegewould deprive
the
opposing party
of
vital
information.");
Page
2
September
8,
2009
 
Eric
Corrngold,
Esq.
Pg
etme
,20That concerndoes
not
apply
here. Bank
of
America
has
notassertedreliance
on
counsel
as
a
defense
to
an
adjudicating
authority.Witnessesunder
subpoena
answered
a
question
that
they
wererequired
to
answer
by
yourOffice.
Neither
Bank
of
America
nor
the
witnesses
chose that
question
to be
asked.YourOffice chose
to
ask
it.
Once
the
question
was
asked,
the
witnesses
andBank
of
America
were
required
to
answer
it
truthfully.
The
answer
to
that
question
was
not
privileged.
No
one has
sought
to take
unfairadvantage
of
the
assertion
ofthe
privilege
by
hiding
information
fromyourOffice
or
anyone
else.
Contrast,
Bowne
of
NewYorkCity.
Inc.
v.
AmBase
Corp.,
150
F.R.D.
465,
478-79(S.D.N.Y.
1993)
("The
attorney-clientprivilege
is
waived
if
the
holder
of
the
privilege
voluntarilydiscloses
or
consents
to
disclosure
of
any
significant
part
of
the
matter
or
communication.")(applying
New
York
lawand
citingcases)(internal
citation
omitted).
The
compelled
and
truthful
answer
to
a
question
posed
by
a
regulatorthat
the
witness
reliedon counseldoes
not
put
the
subject
matter
of
the
advice
at issue or
effect
a
waiver
of
the
privilege.
4
Were
the law
otherwise,
a
regulator
couldcompel
a
company
to
waive
the
privilege
by
simplyasking
a
witness
whether
he
orshe
relied
on
counsel andthen
claiming
the
communicationsthemselves
areat
issue.
To
ourknowledge,
the
New
York
Attorney General
has
never
advocated
such
an
extreme
-
and
baseless
-
position,
nor
hasany
courtaccepted
it.
Fourth,the lettercontains
a
number
of
spurious
and
false
allegations,
including:
*
The
letter devotes
an
entire
page
to
the
timing
of
Merrill
Lynch'sbonus payments
and
questionsinvolving
the role
of
counselwith
respect
to
those
paymentswithout quoting
a
single
question
yourOfficeasked
of
any
witness
regarding
communications
with counsel
or
American
Re-Insurance
Co.
v.
UnitedStates
Fidelity
&
Guaranty
Co
,
837
N.Y.S
2d
616, 622(1 st
Dep't
2007)
("This
doctrineapplies
where
a
party,
through
its
affirmative
acts,
places privilegedmaterial
at
issueand
has
selectivelydisclosed
the
advice.");
Orco
Bank.
N.V.
v
Proteinas
Del
Pacifico.
S.A.,
577
N
Y.S.2d
841
(I1st
Dep't
1992)
(privilege waivedonly where
plaintiff
relied
on
advice
of
counsel
in
litigation
and
madeselectivedisclosure
of
such
advice),Village
Board
of
the
Village
of
Pleasantville
v.
Rattner,
515
N.Y.S.3d
585,
586 (2d
Dep't
1987)
("Where
a
partyasserts
asan
affirmative
defense
the
reliance
upon the
advice
of
counsel,
the
partywaives
the
attorney-client
privilegewith
respect
to
all
communications
to
orfrom
counsel
concerning
the
transactions
for
which
counsel's
advicewas
sought.").
4~Compare,
United
States
v.
White, 887F.2d267(D.C.Cir.
1989)(statementthat
one's
lawyers
"thoroughlyreviewed"
a
matter
is
not
a
waiver);
Sanofi-Synthelabs
v.
Apotex.
Inc.,
363
F.
Supp.
2d
592,
595
(S.D
N.Y.2005)
(statement
in
deposition
that
certain
patent
claims
were
dropped
on
advice
of
counselwas not
a
waiver because"Sanofi
has
not
asserted
factsto
a
decision maker,
such
asa
judge
or
jury,
while
shielding
other
factsfrom that
decision
maker");Miteva
v.
Third-Point
Mgmt.
Co.,
218
F.R.D.
397, 398
(S.D.N
Y.
2003)
(no
waiver
even
thoughtestimony
disclosed
asa
fact
that
a
terminationletter
was
written
on
advice
of
counsel,becausewitness
didnot
selectively
reveal
any
of
the
substance
of
the
communication
itself);
United
States
v
Gasparik,
141
F.
Supp.
2d
36
1,
371
(S.D.N.Y
2001)
(testimonial
statement
that
a
party
would
not act
without
the
advice
of
counsel
is
not
a
waiver),Vicinanzo
v.
Brunschwip,
&
Fils.
Inc
,
739
F.
Supp.
891.893-94(S.D.N.Y
1990)
(mere disclosure
of
review
and
approval
by
counseldoes
not
waive
the
privilege);
In
re
Joy
Global.
Inc.,
No
01-039-LPS,2008
U.S Dist. LEXIS
46495,2008
WL
2435552,
at
*5
(D.Del.
June
16,
2008)
("Disclosure
of
the
fact
that
a
client
has
consulted
an
attorney,
and
evendisclosurethat
an
attorneyapproved
a
course
of
conduct, does
not
waive
the
privilege
otherwise
attaching
to
communications
between
an
attorney
and
client
on
the
subject
of
the
consultation.");
Nat'l
Educ Corn.
v.
Martin,
No.
93
C
6247,
1994 WL
233661,
at
*2
(N D.
Ill.
May
26,1994)
(holding that
an
attorney's
mention
of
certain
legal
opinions and
the
ultimate
legal
conclusions
reached
by
counsel
did notwaive
attorney-client
privilege).
Page
3
September
8,
2009

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