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How did Bank of Americas legal liabilities cost its shareholders

$91 billion since 2008?


From personal experience, I would argue that it is because the
companys board has been AWOL.
Other shareholders seem to agree. When they met on May 6,
2015 to elect the companys directors and approve various
proposals such as those relating to its pay practices, Bank of
America shareholders gave four board members a resounding
boo. Only 67% of shares cast were in favor of Thomas May,
who runs the boards corporate-governance committee, down
from 98% last year. Three other board members up for election
received only 72% support from shareholders, well down from
last years figures.
The day before the shareholder meeting, I met privately with
Sharon Allen, Chairperson of the Audit Committee of the board.
I hoped to discuss her role in protecting the shareholders from
the mischief of Bank of America management. What occurred at
was very revealing.
The meeting arose as a result of information gleaned from a
longtime battle I have waged with the bank over an $83,000
mortgage dating back to 1996 and resulting in the loss of my
home.
As a business person knowledgeable about corporate
governance issues I knew that directors have fiduciary duties to
protect shareholders and other stakeholders from management
improprieties. I asked for the meeting to share with the audit

committee the troubling information I had learned during my


fight with the bank. Perhaps I was nave, but I expected the audit
committee to listen to my story and to resolve my issues
believing that such a resolution would be in the interest of all
involved. I remembered how the Chairman of Enrons Audit
Committee testified before Congress saying: nobody told me
anything. I wanted to make sure the Bank of America Board
was aware of fraudulent practices at the bank dating back to
1996. Ignorance cannot be used as an excuse.
I had asked that James Cheek, independent outside
disclosure counsel for the audit committee, attend the meeting.
He was appointed to his post under settlements the bank reached
with the Securities and Exchange Commission and the New
York State Attorney General.
But Mr. Cheek did not appear. In his place was Jana Litsey,
chief of litigation for the bank, who dominated the meeting in an
attempt to sanitize the conduct of Management. Rather than
getting answers from Ms. Allen relating to her fiduciary duty, I
heard excuses from Ms. Litsey. Despite my good faith effort to
advise Ms. Allen of the banks practices, I was stonewalled
when asked for her point of view. Though the Bank of America
board is supposed to be independent of management, it clearly
was not in this meeting.
My insight on the subject results from the fact that on March 1,
1996 Nationsbanc Mortgage Corporation, a predecessor of Bank
of America, fraudulently invoked the jurisdiction of the
Cuyahoga County Court of Common Pleas by claiming to be the
owner and holder of my note and mortgage. This was simply

untrue. In Ohio, the Ohio Supreme Court determined that a


plaintiff in a foreclosure action must have standing at the time it
files the complaint in order to invoke the jurisdiction of the
court. (Fed. Home Loan Mtge. Corp. v.Schwartzwald, 134 Ohio
St.3d 13, 2012-Ohio-5017at 41-42.) After pretending to own
my note and mortgage, the bank continued to litigate against me
vigorously for over 11 years, hiring a major law firm Jones Day.
All over an $83K mortgage.
We lost our home of 29 years in 2007 under the color of law.
Where is the board of directors at Bank of America in all of this
pursuant to their fiduciary responsibilities to make sure the bank
is run in the best interests of shareholders and stakeholders?
I can tell you by experience, nowhere to be found.
Without independent directors protecting the interests of
shareholders and stakeholders a management proven to be too
big to fail and too big to jail will only be emboldened to
continue the actions that have proved so harmful to so many.
How harmful? Consider these figures from Bank of Americas
most recent annual report.
Excluding expenses of internal or external legal service
providers, litigation-related expense of $16.4 billion was
recognized for 2014 compared to $6.1 billion for 2013.
The annual report also makes references to managements
inability to determine possible liabilities related to its mortgage

practices. This is not rocket science, my past requests for audits


of compliance made to management and the board could
certainly have led to quantifying for shareholders the exact
exposure amounts to be included in the banks annual report
and federal filings. This is a blatant omission of disclosure by
Management.
Federal securities laws also impose liability on directors for
intentional or reckless misrepresentations or material omissions
made in offering documents or proxy solicitations.
In short, the Bank of America board must shape up or ship
out.