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-111- 09^C

UNITE S II I Rf COURTSOUTHERN DISTRICT OFNEWYORK

STEVEN J . SKLAR ( a s IRA AccountB e n e f i c i a r y ) , on behalf of himself a nd a l lo t h e r s s i m i l a rl y s i t u a t e d ,

P l a i n t i f f ,

V .BANK OF AMERICA CORP., KENNETHD . LEWIS, JOHN A. THAIN, GARY A.CARLIN and NELSON CHAI.

D e f e n d a n t s .

C i v i l Action No.Class Action Comp l a intJury T r i a l Demanded

P l a i n t i f f , b y a nd through h i s c o u n s e l , b r i n g s t h i s a c t i o n on behalf ofhi m s elf and a l l o t h e rp e r s o n s s i m i l a r l y s i t u a t e d who owned s h a r e s of Bank of America Corporation (`Bank ofAmerica," `B AC") on October 1 0 , 2008, who were e n t i t l e d t o v o t e t o approve t h e adoption of amerger agreem ent b etween Bank of America a nd M e r r i l l Lynch & C o . , I n c . ( " M e r r i l l Lynch")( t h e "Merger Agreement"), p u r s u a n t a Proxy Statement d a t e d October 3 1 , 2 0 0 8 ( t h e "ProxyStatement " ) f i l e d with t h e United S t a t e s S e c u r i t i e s and Exchange C o m m i s s i o n ("SEC") on o ra b o u t No v e m b e r 3 , 2 0 0 8 ( t h e " C l a s s " ) . P l a i n t i f f ' s a l l eg a t i o ns a r e bas ed upon p e r s o n a lknowledge with r e s p e c t t o h i m s e l f , and upon i n f o r m a t i o n and b e l i e f with r e s p e c t t o a l l o t h e rm a t t e r s bas ed on t h e i n v e s t i g a t i o n of p l a i n t i f f ' s c o u n s e l , i n c l u d i n g , b u t n o t l i m i t e d t o , c o u n s e l ' s

review of SEC f i l i n g s , p r e s s r e l e a s e s a nd o t h e r p u b l i c s t a t e m e n t s from B a nk of America andM e r r i l l Lynch, a nd a n a l y s t r e p o r t s , conference c a l l t r a n s c r i p t s , news a r t i c l e s and d a t a r e f l e c t i n gt h e t r a d i n g p r i c e s of Bank of America a nd M e r r i l l Lynch s e c u r i t i e s .

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NATURE OF THE ACTIONPursuant t o t h e d i s cl o s u r e s i n t h e Proxy S t a t e m e n t , and under t h e t e r m s of t h e

merger approved b y Bank of America s h a r e h o l d e r s on D e c e m b e r 5 , 2 0 0 8 a nd con su m m a t e d onJanuary 1 , 2009, each M e r r i l l Lynch s h a r e wa s exch anged f o r 0.8595 of a s h a r e of Bank ofAmerica common s t o c k ( t h e "Merger")

2 . That Proxy Statement c o n t a i n e d m a t e r i a l m i s r e p r e s e n t a t i o n s a nd o m i t t e d t od i s c l o s e t r u e f a c t s r e l e v a n t t o t h e Merger, i n c l u d i n g f a c t s concerning t h e r i s k o f a nd a c t u a l f u rt h erd e t e r i o r a t i o n of M e r r i l l Lynch' s a s s e t s a nd t h e f a c t t h a t M e r r i l l Ly nc h wo u l d a c c r u e a ma ssive

$ 1 5 . 3 b il l io n l o s s d u r i n g t h e f o u r t h q u a r t e r of 2 0 0 8 . D e s p i t e t h e f a c t t h a t t h e M erger v o t e d i d n o toccur u n ti l a f te r over t w o - t h i r d s of t h e f o u r t h q u a r t e r h a d passed , Defendants f a i l e d t o provideany c o r r e c t i o n , update o r a m e n d m e n t t o t h e Proxy Statement t o d i s c l o s e t h e s e f a ct s t o Bank ofAmerica s h a r e h o l d e r s p r i o r t o t h e v o t e on t h e Merger.

3 . On January 1 6 , 2009, Bank of America announced l o s s e s of $ 1 5 . 3 1 b i l l i o nr e s u l t i n g from c r e d i t and o t h e r a s s e t l o s s e s a t M e r r i l l Lynch . Th e announcement a l s o r e v e a l e d anagreement where t h e U . S . Treasury would i n v e s t $2 0 b i l l i o n i n Bank of America ( i n t h e form ofp r e f e r r e d s h a r e s ) , and provide a d d i t i o n a l g u a r a n t e e s a g a in s t l o s s e s on approximately $11 8 b i l l i o ni n a s s e t s , 75% of wh i c h we re p r e v i o u s l y own e d b y M e r r i l l Lynch.

JURISDICTION AND VENUE4 . Th e c l a i m s a s s e r t e d b e l o w a r i s e under S e c t i o n 1 4 ( a ) of t h e S e c u r i t i e s Exchange

Act of 1934 ( t h e "Exchange A c t " ) , 1 5 U.S.C. 7 8 n ( a ) , and t h e r u l e s and r e g u l a t i o n s promulgatedt h e r e u n d e r , i n c l u d i n g SEC Regulation 1 4 a - 9 , 1 7 C . F . R . 2 40 . 1 4 a - 9 .

5 . J u r i s d i c t i o n i s c o n f e r r e d upon t h i s Court b y S e c t i o n 2 7 of t h e Exchange A c t , 1 5

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U . S . C . 7 8 a a , a nd 2 8 U.S.C. 1 3 3 1 .6 . Venue i s proper i n t h i s D i s t r i c t p u r s u a n t t o S e c t i o n 2 7 of t h e Exchange A c t , 1 5

U.S.C. 7 8 a a , and 28 U.S.C. 1 3 9 1 ( b ) . Many of t h e a c t s a nd t r a n s a c t i o n s g i v i n g r i s e t o t h ev i o l a t i o n s of l aw d e s c r i b e d i n t h i s Complaint o c c u r r e d w i t h i n t h i s j u d i c i a l d i s t r i c t . Among o t h e rt h i n g s , M e r r i l l Lynch (now p a r t of d e f e n d a n t Bank of America) wa s a t a l l t i m e s headquartered i nt h i s D i s t r i c t and t h e r e l e a s e of f i n a n c i a l i n f o r m a t i o n concerning M e r r i l l Lynch e manated fromt h i s D i s t r i c t .

7 . I n connection with t h e a c t s a l l e g e d h e r e i n , d e f e n d a n t s , d i r e c t l y a n d / o r i n d i r e c t l y ,

used t h e m e a n s a nd i n s t r u m e n t a l i t i e s of i n t e r s t a t e co m m e r c e , i n c l u d i n g t h e United S t a t es m a i l ,a nd t h e f a c i l i t i e s of t h e n a t i o n a l and r e g i o n a l s e c u r i t i e s m a r k e t .

PARTIES

P l a i n t i f f

8 . P l a i n t i f f Steven J . S k l a r ( a s IR A account b e n e f i c i a r y ) , a s r e f l e c t e d i n t h e a t t a c h e dc e r t i f i c a t i o n , own e d s h a r e s of Bank of America common s t o c k a t a l l t i m e s r e l e v a n t h e r e t o a ndwa s d a m a g e d t h e r e b y .

Defendants9 . Defendant Bank of America i s a Delaware c o r p o r a t i o n with i t s p r i n c i p a l o f f i c e s

l o c a t e d i n C h a r l o t t e , N o r t h C a r o l i n a . At a l l r el e va n t t i me s , Bank o f America o p e r a t e d a s a bankh o l d i n g co mp a ny a nd f i n a n c i a l holding company.

1 0 . Defendant Kenneth D. Lewis ( " L e w i s " ) i s , a nd wa s a t a l l r e l e v a n t t i m e s ,Ch a irman of t h e Board, Chief Executive O f f i c e r and P r e s i d e n t of Bank of America.

1 1 . Defendant John A. Thain ( " T h a i n " ) wa s a t a l l r e l e v a n t t i m e s Ch a irman of t h e


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Board a nd Chief Executive O f f i c e r of M e r r i l l Lynch.1 2 . Defendant Nelson Chai ( " C h a i " ) wa s a t a l l r e l e v a n t t i m e s Executive Vice

P r e s i d e n t a nd Ch i ef F i na n c i a l O f f i c er of M e r r i l l Lynch.

1 3 . Defendant Gary C a r l i n ( " C a r l i n " ) wa s a t a l l r e l e v a n t t i m e s Vice P r e s i d e n t ,C o n t r o l l e r and Chief Accounting O f f i c e r of M e r r i l l Lynch.

1 4 . Defendants l is t e d i n paragraphs n i n e through twe l ve a r e sometime s h e r e i n a f t e rr e f e r r e d t o c o l l e c t i v e l y a s t h e " I n d i v i d u a l Defendants."

CLASSACTION ALLEGATIONS

1 5 . T h i s a c t i o n i s brought b y P l a i n t i f f a s a c l a s s a c t io n , p u r s u a n t t o Rules 2 3 ( a ) and( b ) ( 3 ) of t h e F e d e r a l Rules of C i v i l P r o c e d u r e , on behalf of himself a nd a l l o t h e r persons wh oowned s h a r e s of Bank of America common s t o c k a s of October 1 0 , 2008, t h e r e c o r d d a t e f o r t h ev o t e on a p p r o v a l of t h e propo s e d M er ge r, a n d were d a m a g e d t h e r e b y . Excl u d e d from t h e C l a s sa r e t h e d e f e n d a n t s , a f f i l i a t e s of t h e d e f e n d a n t s , and t h e immediate f a m i l y m e m b e r s of t h eI n d i v i d u a l D e f e n d a n t s .

1 6 . As of October 3 1 , 2008, t h e r e were 5 , 0 1 7 , 5 7 9 , 3 2 1 o u t s t a n d i n g s h a r e s of Bank ofAmerica common s t o c k h e l d b y thousands of s h a r e h o l d e r s . As a r e s u l t , j o i n d e r of a l l p o t e n t i a lc l a s s m e m b e r s i n a s in gl e a c t i o n i s i m p r a c t i c a b l e .

1 7 . P l a i n t if f w i l l f a i r l y a nd a d e q u a t e l y p ro t ec t t h e i n t e r e s t s of t h e m e m b e r s of t h eC l a s s , inasmuch a s h e i s a m e m b e r of t h e C l a s s and h i s c l a i m i s t y p i c a l of t h e c l a i m s of a l l C l a s sm e m b e r s. P l a i n t i f f h a s r e t a i n e d competent c o u n s e l experienced i n c l a s s a c t i o n s e c u r i t i e sl i t i g a t i o n . P l a i n t i f f h a s no i n t e r e s t s t h a t a r e a d v e r s e o r a n t a go n i s t i c t o t h o s e of t h e C l a s s .P l a i nt i ff ' s i nt e re s t i s t o o b t a i n a p p r o p r i a t e r el i ef f o r h i ms e lf a n d f o r t h e C l a s s f o r t h e h arms

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a r i s i n g o u t of t h e v i o l a t io n s of law s e t f o rt h h e re i n .1 8. There a r e q u e s t i o n s o f l a w a nd f a c t common t o a l l m e m b e r s of t h e C l a s s i n t h i s

a c t i o n , i n c l u d i n g , i n t e r a l i a :

a . whether d e f e n d a n t s v i o l a t e d t h e f e d e r a l s e c u r i t i e s laws b y m a ki ng s o l i c i t a t i o n su s i n g t h e Proxy Statement which c o n t a i n e d s t a t e m e n t s t h a t , a t t h e time a nd i nl i g h t of t h e c i r c u m s t a n c e s under which t h e y were m a d e , were f a l s e o r misleadingwith r e s p e c t t o a m a t e r i a l f a c t , o r which o m i t t e d t o s t a te a m a t e r i a l f a c t n e c e s s a r yi n o r d e r t o m a k e t h e s t a t e m e n t s t h e r e i n n o t f a l s e o r misleading o r n e c e s s a r y t oc o r r e c t a ny s t a t e m e n t m a d e i n e a r l i e r communications with r e s p e c t t o t h es o l i c i t a t i o n of t h e v o t e i n t h e Proxy S t a t e m e n t ; and

b . whether D e f e n d a n t s , b y t h e i r wrongful c o n d u c t , caused and c o n t i n u e t o c a u s eP l a i n t i f f a nd o t h e r m e m b e r s of t h e C l a s s t o s u f f e r d a m a g e s a n d , i f s o , t h e properme a sure t h e r e o f .

1 9 . Th e q u e s t i o n s of f a c t a nd l aw t h a t a r e common t o t h e C l a s s predominate over a nyq u e s t i o n s s o l e l y a f f ec t in g i n d i v i d u a l m e m b ers.

2 0 . A c l a s s a c t i o n i s s u p e r i o r t o o t h e r a v a i l a b l e methods f o r t h e f a i r a nd e f f i c i e n ta d j u d i c a t i o n of t h i s c o n t r o v e r s y . I t would b e i m p r a c t i c a b l e and u n d e s i r a b l e f o r each m e m b e r oft h e C l a s s wh o h a s s u f f e r e d h a r m t o b r i n g s e p a r a t e a c t i o n s . I n a d d i t i o n , t h e b r i n g i n g of sucha c t i o n s would p u t a s u b s t a n t i a l a nd unnecessary burden on t h e c o u r t s , while a s i n g l e c l a s s a c t i o ncan determine t h e r i g h t s of a l l c l a s s m e m b e r s with j u d i c i a l economy.

2 1 . F u r t h e r m o r e , a s t h e d a m a g e s s u f f e r e d and t o b e s u f f e r e d b y i n d i v i d u a l C l a s sm e m b e r s may be r e l a t i v e l y s m a l l , t h e expense a nd b urd e n of i n d i v i d u a l l i t i g a t i o n m a k e s i ti m p o s s i b l e f o r t h e C l a s s m e m b e r s i n d i v i d u a l l y t o r e d r e s s t h e wron g s d on e t o them. No unusuald i f f i c u l t i e s a r e l i k e l y t o b e encountered i n t h e m a n a g e m e n t of t h e c l a s s a c t i o n .


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SUBSTANTIVE ALLEGATIONSBackground

2 2 . M e r r i l l Lynch d e s c r i b e s i t s e l f a s " one of t h e w o r l d ' s l e a d i n g c a p i t a l m a r k e t s ,a d v i s o r y a nd wealth m a n a g e m e n t companies with o f f i c e s i n 40 c o u n t r i e s a nd t e r r i t o r i e s a nd t o t a lc l i e n t a s s e t s of approximately $ 1 . 5 t r i l l i o n a t Septemb er 2 6 , 2008. As an investment b a n k , wea r e a l e a d i n g g l o b a l t r a d e r and u n d e r w r i t e r of s e c u r i t i e s a nd d e r i v a t i v e s a c r o s s a broad range ofa s s e t c l a s s e s , a nd we s e r v e a s a s t r a t e g i c a d v i s o r t o c o r p o r a t i o n s , governments, i n s t i t u t i o n s andi n d i v i d u a l s worldwide."

2 3 . Over t h e c o u r s e of t h e l a s t e i g h t e e n month s , M e r r i l l Lynch h a s r e p o r t e d n e t l o s s e sover s i x c o n s e c u t i v e q u a r t e r s . These l o s s e s were s u b s t a n t i a l l y a t t r i b u t a b l e t o d e c l i n i n g v a l u e s oft r a d i n g a s s e t s h e l d b y M e r r i l l Lynch a s a p ri n c ip a l i n t h o s e t r a n s a c t i o n s . Th e t r o u b l e d a s s e t si n c l u d e c e r t a i n c a t e g o r i e s of a s s e t - b a c k e d s e c u r i t i e s , i n c l u d i n g mortgage-backed s e c u r i t i e s ,c o l l a t e r a l i z e d d e b t o b li g a t i o n s (CDOs) and r el a t e d d e r i v a t i v e p o s i t i o n s used a s e i t h e r hed g es o ri n v e s t m e n t s i n t h e i r own r i g h t .

2 4 . Other investment b anks h a d experienced s i m i l a r d i f f i c u l t i e s amidst i l l i q u i d marketc o n d i t i o n s a nd d e c l i n i n g a s s e t v a l u e s . Mo st n o t a b l y , i n M arch 2008, Bear S t e a r n s b e c a m ee f f e c t i v e l y i n s o l v e n t a nd wa s purchased b y J PM o rg a n C h a s e i n a d e a l a r r a n g e d a nd backed b y t h eU . S . Treasury Department and t h e F e d e r a l R e s e r v e .

2 5 . During t h e w e e k of Septemb er 8 , 2008, t h e s t o c k p r i c e s of many major f i n a n c i a ls e r v i c e s companies d e c l i n e d s i gn i f i c a n t l y a s r e p o r t s c i r c u l a t ed r e g a r d i n g f i n a n c i a l d i f f i c u l t i e s a tL e h m a n B r o t h e r s H o l d i n g s , I n c . ("Lehman").

2 6 . On Septemb er 1 0 , 2008, L e h m a n pre-announced a $ 3 . 9 b i l l i o n n e t l o s s f o r i t s t h i r d


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q u a r t e r of 2008, a s w e l l a s a n u m b e r of i n i t i a t i v e s t o b o l s t e r i t s f i n a n c i a l v i a b i l i t y . Le h m a n' st r o u b l e s were p r i m a r i l y a s s o c i a t ed with i l l i q u i d mortgage a nd r e a l e s t a t e r e l a t e d s e c u r i t i e s .D e s p i t e Le h m a n' s e ff or ts t o p r e v e n t i n s o l v e n c y , b y Septemb er 1 2 , 2 0 0 8 i t b e c a m e c l e a r t h a tL e h m a n wa s running o u t of o p t i o n s a nd would l i k e l y f i l e f o r b a n k r u p t c y .

2 7 . Given i n v e s t o r s ' p e r c e p t i o n s of s i m i l a r r i s k s a s s o c i a t e d with M e r r i l l Lynch'sb a l a n c e s h e e t , over t h e c o u r s e of t h e w e e k ending o n S e pt em b e r 1 2 , 2008, M e r r i l l Lynch'scommon s t o c k p r i c e d e c l i n e d b y $ 3 . 9 1 p e r s h a r e , o r approximately 2 4 p e r c e n t , t o c l o s e a t $12.59p e r s h a r e on F r i d a y , Septemb er 1 2 , 2 0 0 8 .

2 8 . Th e Proxy Statement d i s c l o s e s t h a t on t h e morning of F r i d a y , Septemb er 1 2 ,2 0 0 8 , t h e M e r r i l l Lynch b oa rd of d i r e c t o r s h e l d an i n f o r m a t i o n a l conference c a l l d u r i n g whichs e n i o r m a n a g e m e n t updated d i r e c t o r s on r e c e n t market c o n d i t i o n s , Le h m a n' s waning f i n a n c i a lv i a b i l i t y , t h e s t a t u s of M e r r i l l Lynch' s c a p i t a l , l i q u i d i t y a nd b u s i n e s s r e s u l t s , M e r r i l l Lynch'sr ec e n t s t o c k performance, a nd p o te n t i a l r a t in g agency a c t i o n s .

2 9 . During t h a t c o n f e r e n c e c a l l t h e M e r r i l l Lynch b oa rd urg e d m a n a g e m e n t t oc o n t i n u e t o e v a l u a t e t h e p o t e n t i a l i mpa ct o f market deve lopments on M e r r i l l Lynch and t h ep o s s i b l e c o u r s e s of a c t i o n M e r r i l l Lynch might pursue i n response t o v a r i o u s p o s s i b l e s c e n a r i o s .Th e M e r r i l l Lynch b oa rd of d i r e c t o r s s t r e s s e d t h e need f o r M e r r i l l Lynch t o b e prepared t o a c tq u i c k l y a s e v e n t s u n f o l d e d .

3 0 . According t o a Septemb er 1 9 , 2 0 0 9 a r t i c l e i n Th e Wall S t r e e t J o u r n a l :[On Septemb er 1 3 , 2 0 0 8 , ] John T h a i n , t h e n Ch a irman a n d Ch i ef Ex ecut iv e O f f i c e rof M e r r i l l Lynch wa s busy a t t h e New York Fe d working on Le h m a n ' s prob l e m sw h e n a sudden r e a l i z a t i o n h i t him: I f he d i d n ' t a c t f a s t , h i s own brokerage f i r m ,M e r r i l l , might n o t s u r v i v e t h i s c r i s i s . I t o c c u r r e d while l i s t e n i n g t o Lehman'sp r e s i d e n t , H e r b e r t H. " B a r t " McDade I I I , g i v e a s o b e r i n g s u m m a r y ofLehman's a s s e t s

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a nd l i a b i l i t i e s . " T h i s c o u l d b e me b y F r i d a y , " Mr. Thain t h o u g h t , according t o peoplewh o h a ve s po ke n t o him.Th e s t a k e s were high f o r Mr. T h a i n , a G o l d m a n a l u m a nd fo rm er h e a d of t h e NewYork Stock Exchange who h a d b e en M e r r i l l ' s CEO only s i n c e December.Over t h e p a s t y e a r , M e r r i l l h a s w r i t t e n d own m or e t h a n $46 b i l l i o n due t o b a d b e t son r e a l e s t a t e a nd o t h e r m o r t g a g e - r e l a t e d i n v e s t m e n t s . Mr. Thain wa s brought i n t oc l e a n up t h e mess. S t i l l , M e r r i l l ' s s t o c k wa s g e t t i n g h a m m e r e d . I t h a d f a l l e n mor et h a n 12% on F r i d a y a l o n e .Th e 5 3 - y e a r - o l d M r. Th a i n ducked o u t of h i s m e e t i n g , c a l l e d Kenneth D. Lewis, t h eCEO of Bank of America C o r p . , a nd asked h i m i f h e ' d b e i n t e r e s t e d i n buyingM e r r i l l .

3 1 . According t o t h e s a m e Septemb er 1 9 , 2008, Wall S t r e e t J o u r n a l a r t i c l e :Mr. Lewis d i d n ' t h e s it a t e. Here wa s a chance f o r t h e M i s s i s s i p p i - b o r n s on o f a s o l d i e rand n i g h t - s h i f t n u r s e - - a man kn own a m o ng bankers f o r c r a v i n g t h e r e s p e c t of t h eWall S t r e e t e s t a b l i s h m e n t - - t o e l e v a t e Bank of America a s r i v a l s crumb l ed aroundhim.

[B]y 2 :30 t h a t a f t e r n o o n [ o n Septemb er 1 3 , 2 0 0 8 ] , t h e two men were f a c e t o f a c e i nNew York. Th e meeting s e t i n motion a 36-hour marathon n e g o t i a t i n g s e s s i o n .3 2 . Based on news r e p o r t s and t h e timing of t h e Merger, both M e r r i l l Lynch and Bank

of America m o v e d q u i c k l y , i n l i g h t of t h e a p p a r e n t l y i m m in ent bankruptcy of L e h m a n B r o t h e r sa nd d e t e r i o r a t i n g market c o n d i t i o n s . By Sunday, Septemb er 1 4 , 2 00 8, o nl y one da y a f t e r t h ep ro c e s s b e g a n , M e r r i l l Lynch a nd Bank of Am e ri c a h a d a g r e e d on t h e p r i n c i p a l terms of t h eMerger, p r o v i d i n g f o r a s t o c k- f o r - s t o c k a c q u i s i t i o n of M e r r i l l Lynch a t an exch ange r a t i o of0 . 8 9 5 s h a r e s of Bank of America f o r each M e r r i l l Lynch s h a r e . As of Septemb er 1 4 , 2008, t h ei m p l i e d v a l u e of t h e c o n s i d e r a t i o n t o M e r r i l l Lynch s h a r e h o l d e r s wa s $29 p e r s h a r e a nd M e r r i l lLynch s h a r e h o l d e r s would own approximately 23% of t h e comb in e d company.

3 3 . On Septemb er 1 5 , 2008, Bank of America announced t h a t i t h a d a g r e e d t o a c q u i r e


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M e r r i l l Lynch & C o . , I n c . i n a $5 0 b il l io n a l l - s t o ck t r a n s a c t i o n t h a t , a c c o r d i n g t o Bank ofAmerica, " cr ea t e s a co mp a ny u n r i v a l e d i n i t s b r e a d t h of f i n a n c i a l s e r v i c e s a nd g l o b a l r e a c h . "According t o t h e Bank of America p r e s s r e l e a s e :

Bank ofAmerica Corporation today announced i t h a s a g r e e d t o a c q u i r e M e r r i l l Lynch& C o . , I n c . i n a $5 0 b il l i o n a l l - s t o c k t r a n s a c t i o n t h a t c r e a t e s a co mp a ny u n r i v a l l e d i ni t s b r e a d t h of f i n a n c i a l s e r v i c e s and g l o b a l r e a c h ."Acquiring one of t h e premier wealth m a n a g e m e nt, c a p i t a l m a r k e t s , a nd a d v i s o r ycompanies i s a g r e a t o p p o r t u n i t y f o r our s h a r e h o l d e r s , " Bank of Am e ri c a C ha i r ma na nd Chief Executive O f f i c e r Ke n Lewis s a i d . " T o g e t h e r , ou r companies a r e m or ev a l u a b l e b e ca us e of t h e s y n e r g i e s i n our b u s i n e s s e s . "3 4 . During a conference c a l l o n S e pt em b e r 1 5 , 2008, Joe L . P r i c e , Bank of America's

CFO s t a t e d , " [ t ] h e p r i c e r e p r e s e n t s roughly 1 . 8 x s t a t e d t a n g i b l e book v a l u e . I t ' s roughly 12xM e r r i l l Lynch's 2 0 0 9 p r o j e c t s e a r n i n g s bas ed on F i r s t C a l l consensus e s t i m a t e s . . . we used F i r s tC a l l consensus e s t i m a t e s a s a base f o r mode l ing t h e t r a n s a c t i o n . "

3 5 . A n a l y s t s on t h e c a l l q u e s t i o n e d t h e r a t i o n a l e f o r t h e d e a l p r i c e a nd s u g g e s t e d t h a tBank of America maybe overpaying f o r M e r r i l l . Ma tt h ew O'Connor, an a n a l y s t a t U B S, p o i n t e do u t " t h e r e ' s a l o t of n e a r - t e r m u n c e r t a i n t y a nd I t h i n k a l o t of people would v i e w M e r r i l l ' s s t o c ka s s e l l i n g o f f today a nd t h i s w e e k i f t h e d e a l h a d n ' t b e e n announced. I g u e s s t h e q u e s t i o n i s whypa y $29 a t t h i s p o i n t ? "

3 6 . Defendant Lewis q u e l l e d concerns b y s t a t i n g " t h e long term b e n e f i t s were s ooverwhelming, i t wa s such a s t r a t e g i c o p p o r t u n i t y . . . we t h o u g h t we h ad a compelling s i t u a t io n f ort h e s h a r e h o l d e r s over t h e l o n g - t e r m . "

3 7 . When a n o t h e r a n a l y s t asked about t h e n e c e s s a r y write-downs on M e r r i l l ' s a s s e t sa nd i f t h e numb ers p r e s e n t e d with t h e announcement i n c l u d e any mark-to-market w r i t e - d o w n s ,


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Defendant Lewi s a n swe r ed " Th e n um b e rs t h a t we p r e s e n t e d today we h ave c o n s i d e r e d marks ont h e a s s e t s . . . 1 would t e l l you t h a t , a g a i n , going b ack t o t h e p o i n t of t h i n g s such a s CDOs, we h avevery s i m i l a r methodology v a l u a t i o n s and we h ave very s i m i l a r marks t o s t r u c t u r e s . We a r ed e a l i n g with t h e s a m e c o u n t e r p a r t i e s on t h i n g s s o a g a i n , we're p re t t y f a m il i a r with t h e t y p e s ofa s s e t s a nd f e e l p r e t t y good about t h e p r o g r e s s t h a t M e r r i l l Lynch has made."

3 8 . A n a l y s t s wh o s t u d i e d t h e t r a n s a c t i o n a l s o p r e d i c t e d t h e f a c t t h a t M e r r i l l Lynchc o u l d e x p e r i e n c e f u r t h e r a s s e t write-downs and l o s s e s t h a t would impair t h e v a l u e of t h e Merger.A Deutsche Bank a n a l y s t r e p o r t , d a t e d Septemb er 1 6 , 2008, i d e n t i f i e d t h e p o t e n t i a l r i s k of f u r t h e r

write-downs a t M e r r i l l Lynch:Th e b i g q u e s t i o n surrounding c a p i t a l market b u s i n e s s e s i s , " h o w much mor e i nwrite-downs a r e l i k e l y ahead?" I n p a r t i c u l a r , a n e w weakness a t AIG h a s t h ep o t e n t i a l t o h u r t M e r r i l l ' s c a p i t a l v i a any p o t e n t i a l i n s u r a n c e on i t s ABS CDO.A l t er n a t i v el y , a d d i t i o n a l s e l l i n g of r i s k y commercial o r r e s i d e n t i a l r e a l e s t a t ea s s e t s c o u l d impact M e r r i l l ' s commercial r e a l e s t a t e s e cu r it i es ( $ 1 8 B ) , o t h e r r i s k ymortgage a s s e t s ($31B; i n c l u d e s $1OB a l t - A , s u bpr i me a n d non-US r e s i d e n t i a l ) ,a nd l e v e r a g e d f i n a n c e ( $ 8 B ) , n o t w i t h s t a n d i n g d e c l i n e s i n t h e s e amounts s i n ce t h ee nd of 2 Q 0 8 . I n a d d i t i o n s t o t h e " r i s k y " a s s e t s , M e r r i l l a l s o h a s $33.7B i n USpri m e m ort g a ge s on b a l a n c e s h e e t . . . Moreover, i t s e e m s a s though BAC h a donly 36 hours of due d i l i g e n c e , which does n o t g i v e e x t r a comfort i n anenvironment w h e n l o s s e s t i m a t e s s e e m t o i n cr e a s e q u a r t e r a f t e r q u a r t e r . I n d e e d ,s e v e r a l d e t a i l s were n o t i n c l u d e d i n t h e p r e s e n t a t i o n , such a s p r o formam a n a g e m e nt, l o c a t i o n , t i m e l i n e ( b e s i d e s d e a l c l o s e i n e a r l y l Q 0 9 and c o n v e r s i o n ssometime i n 2 0 1 0 ) , e t c . T h i s b y i t s e l f i s l e s s t h e i s s u e (we h ave confidence t h a tBAC ca n work t h i s o u t i n a r e a s o n a b l e m a nn e r given proven s u c c e s s i n p r e v i o u si n t e g r a t i o n s ) v s . t h e b i g g e r i s s u e s of comfort with t h e l e v e l of marks on MER'sb o o k s . On e wa y t o t h i n k a b o u t t h e margin of s a f e t y f o r BAC i s t h a t i t s purchasep r i c e s e e m s t o g i v e i t room t o i n c u r $1 2 b i l . of a d d i t i o n a l marks b e f o r e t h e p ri ce i sabove MER's a d j u s t e d b ook v a l u e .3 9 . I n l i g h t of a l l t h e f o r e g o i n g , i n p r e p a r i n g t h e Proxy S t a t e m e n t , and t h e m a t e r i a l s

i n c o r p o r a t e d t h e r e i n b y r ef e r e n c e , t h e Defendants were w e l l a wa re of t h e s e v e re , a c u t e r i s k sa s s o c i a t e d with t h e t y p e s of now i l l i q u i d a s s e t s accumulated b y investment banks g e n e r a l l y , and


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M e r r i l l Lynch i n p a r t i c u l a r , and h a d a due d i l i g e n c e o b l i g a t i o n t o e n s u r e t h a t d i s c l o s u r e s t o Bankof America s h a r e h o l d e r s with r e s p e c t t o M e r r i l l Lynch's f i n a n c i a l c o n d i t i o n were a c c u r a t e a nd

c o m p l e t e .

DEFENDANTS' MATERIALLY FALSE AND MISLEADINGSTATEMENTS AND OMISSIONS CONCERNING THE MERGER

Merrill Lynch's October 1 6 , 2 0 0 8 Press Releas eAnnouncing Third Quarter 2 0 0 8 Financial Results

4 0 . Th e Proxy Statement i n c o r p o r a t e d b y r e f e r e n c e s e v e r a l documents, i n c l u d i n gM e r r i l l Lynch' s f i l i n g on Form 8 -K d a t e d October 1 6 , 2 0 0 8 . That f i l i n g i n c l u d e d a s E x h i b i t s

9 9 . 1 a nd 9 9 . 2 , r e s p e c t i v e l y , M e r r i l l Lynch' s p r e s s r e l e a s e announcing i t s r e s u l t s f o r t h e ThirdQ u a r t e r of 2 0 0 8 a nd a P r e l i m i n a r y Unaudited Earnings S u m m a r y f o r t h e Third Q u a r t e r . Th ep r e s s r e l e a s e s t a t e d t h a t M e r r i l l Lynch r e p o r t e d :

[ A ] n e t l o s s from c o n t i n u i n g o p e r a t i o n s f o r t h e t h i r d q u a r t e r of 2 0 0 8 of $ 5 . 1 b i l l i o n ,o r $ 5 . 5 6 p e r d i l u t e d s h a r e , compared with a n e t l o s s from c o n t i n u i n g o p e r a t i o n s of$ 2 . 4 b i l l i o n , o r $ 2 . 9 9 p e r d i l u t e d s h a r e, f or t h e t h i r d q u a r t e r of 2007. M e r r i l l L y n c h ' sn e t l o s s f o r t h e t h i r d q u a r t e r of 2 0 0 8 wa s $ 5 . 2 b i l l i o n , o r $ 5 . 5 8 p e r d i l u t e d s h a r e ,compared with a n e t l o s s of $ 2 . 2 b i l l i o n , o r $ 2 . 8 2 p e r d i l u t e d s h a r e , f o r t h e y e a r - a g oq u a r t e r .

4 1 . I n i t s f i n a n c i a l r e s u l t s , M e r r i l l Lynch b r e a k s o u t i t s revenue a m o n g s e v e r a lc a t e g o r i e s , i n c l u d i n g " p r i n c i p a l t r a n s a c t i o n s . " I n i t s No v e m b e r 4 , 2 0 0 8 Form 1 0-Q ( d i s c u s s e db e l o w ) , M e r r i l l Lynch d e s c r i b e d " p r i n c i p a l t r a n s a c t i o n s " :

P r i nc i pa l t r a n s a c t i o n s revenues i n c l u d e both r e a l i z e d a nd u n r e a l i z e d g a i n s a ndl o s s e s on t r a d i n g a s s e t s a nd t r a d i n g l i a b i l i t i e s , investment s e c u ri t ie s c l a s s if ie d a st r a d i n g investments a nd f a i r v a l u e changes a s s o c i a t e d with s t r u c t u r e d d e b t . Thesei n s t r u m e n t s a r e recorded a t f a i r v a l u e . F a i r v a l u e i s t h e p ri ce t h a t would b er e c e i v e d t o s e l l an a s s e t o r p a i d t o t r a n s f e r a l i a b i l i t y i n an o r d e r l y t r a n s a c t i o nb etween marketplace p a r t i c i p a n t s . Gains a nd l o s s e s a r e recognized on a t r a d e d a t eb a s i s .

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4 2 . I n i t s t h i r d q u a r t e r 2 0 0 8 p r e s s r e l e a s e M e r r i l l Lynch r e p o r t e d n e g a t i v e $ 6 . 5 b i l l i o n

i n p r i n c i p a l t r a n s a c t i o n s r e v e n u e , i n d i c a t i n g a n e t l o s s due t o r e a l i z e d o r u n r e a l i z e d l o s s e s ( e i t h e r

a s s e t impairment write-downs o r d e c l i n e s i n mark-to-market v a l u a t i o n s ) i n t h e s e c u r i t i e s h e l d on

i t s b a l a n c e s h e e t .4 3 . Among t h e " s i g n i f i c a n t i t e m s " d r i v i n g t h i r d q u a r t e r revenues i d e n t i f i e d i n t h e

October 1 6 , 2 0 0 8 p r e s s r e l e a s e were write-downs a nd a s s e t l o s s es t o t a l in g $ 1 2 . 1 b i l l i o n :- Ne t writ e - down s of $ 5 . 7 b i l l i o n r e s u l t i n g from t h e p r e v i o u s l y announced s a l e ofU . S . s u p e r - s e n i o r ABS CDOs( 1) a nd t h e t e r m i n a t i o n and p o t e n t i a l s e t t l e m e n t ofr e l a t e d hed g es with monoline g u a r a n t o r c o u n t e r p a r t i e s .

- Ne t write-downs of $ 3 . 8 b i l l i o n , p r i n c i p a l l y from s e v e r e market d i s l o c a t i o n s i nSeptember, i n c l u d i n g r e a l e s t a t e - r e l a t e d a s s e t writ e -d own s a n d l o s s e s r e l a t e d t oc e r t a i n government-sponsored e n t i t i e s a nd major U . S . b r o k e r - d e a l e r s , a s w e l l a s t h ed e f a u l t of a U . S . b r o k e r - d e a l e r .

- Ne t l o s s e s of $ 2 . 6 b i l l i o n , r e s u l t i n g p r i m a r i l y from completed a nd planned a s s e ts a l e s a c r o s s r e s i d e n t i a l a nd commercial mortgage exposures

4 4 . I n c o n j u n c t i o n with i t s Third Q u a r t e r r e l e a s e , M e r r i l l Lynch noted "Third Q u a r t e r

a nd F i r s t Nine Months of 2 0 0 8 H i g h l i g h t s , " i n c l u d i n g , a m o n g o t h e r s :- S i g n i f i c a n t p r o g r e s s i n b a l a n c e s h e e t and r i s k r e d u c t i o n ; RWA d e c l i n e d b yapproximately 1 5 p e r c e n t over t h e q u a r t e r ; and

- Reductions of 98 p e r c e n t of U . S . Alt-A r e s i d e n t i a l mortga ge n e t e x p o s u r e s .I n c l u d i n g planned s a l e s , r e d u c t i o n s o f 5 6 p e r c e n t i n non-U.S. r e s i d e n t i a l mortgagesa nd 2 5 p e r c e n t i n commercial r e a l e s t a t e , excluding F i r s t Republic Bank and t h e U . S .Banks Investment S e c u r i t i e s P o r t f o l i o .4 5 . Th e October 1 6 , 2 0 0 8 P r e s s R e l e a s e , i n c l u d e d a quote from Defendant John Thain

where he s t a t e d t h a t , "[w]e c o n t i n u e t o reduce exposures and d e - l e v e r a g e t h e balance s h e e t p r i o r

t o t h e c l o s i n g of t h e Bank of America d e a l . As t h e landscape f o r f in a nc i a l s e r v ic e s f i r m sc o n t i n u e s t o change a nd o u r t r a n s i t i o n team s m a k e good p r o g r e s s , we b e l i e v e ev en m or e t h a t t h e

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t r a n s a c t i o n w i l l c r e a t e an u n p a r a l l e l e d g l o b a l co mp a ny with pre-eminent s c a l e , e a r n i n g s powerand b r e a d t h . "

Merrill Lynch's Third Quarter 2 0 0 8 Form 1 0 - Q4 6 . On No v e m b e r 4 , 2008, M e r r i l l Lynch f i l e d i t s q u a r t e r l y r e p o r t on Form 1 0 - Q f o r

t h e t h i r d q u a r t e r of 2 0 0 8 (ended Septemb er 2 6 , 2 0 0 8) wi th t h e SEC. Th e 1 0 - Q wa s s i g n e d b yDefendants Ch ai a nd C a r l i n . Th e Proxy S t a t e m e n t , a t p g . 1 2 4 , s p e c i f i c a l l y i n c o r p o r a t e d b yr e f e r e n c e " a d d i t i o n a l documents t h a t e i t h e r co mp a ny f i l e s with t h e SEC" i n c l u d i n g " Q u a r t e r l y

Reports on Form 1 0 -Q a nd C u r r e n t Reports on Form 8-K."4 7 . M e r r i l l Lynch's No v e m b e r 4 , 2 0 0 8 Form 1 0 -Q s u b s t a n t i a l l y i n c o r p o r a t e d t h e

f i n a n c i a l r e s u l t s a nd f i n a n c i a l i n f o r m a t i o n quoted a bove from t h e October 1 6 , 2 0 0 6 8 - K / P r e s s

Release and r e p r e s e n t e d t h a t t h e f i n a n c i a l d i s c l o s u r e s i n t h e 1 0 -Q complied with g e n e r a l l y

a c c e p t e d accounting p r i n c i p l e s (GAAP).4 8 . Th e Form 1 0 -Q d i s c l o s e d t h a t M e r r i l l Lynch h a d t o t a l a s s e t s of $875.8 b i l l i o n ,

which i n c l u d e d t h e f o l l o w i n g a s s e t c a t e g o r i e s , t o t a li ng $ 2 6 1 . 5 b i l l i o n , t h a t were s u b s t a n t i a l l y

s u b j e c t t o t h e l o s s e s and write-downs announced i n t h e f o u r t h - q u a r t e r of 2 0 0 8 ( d i s c u s s e d b e l o w ) :


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Value , in m i l l i o n s , asAsset Category o f S e p t e m b e r 2 6 , 2 0 0 8

Trad ing a s s e t s , a t f a i r v a l u e ( i n c l u d e s s e c u r i t i e s pledged asc o l l a t e r a l t h a t ca n b e s o l d o r repledged o f $27,074 i n 2 0 0 8 ) ,i n c l u d i n g : 1 8 9 , 3 5 8

D e r i v a t i v e c o n t r a c t s 74,106E q u i t i e s a nd c o n v e r t i b l e debentures 34,311Corporat e d e bt and p r e f e r r e d s t o c k 38,998

Mortgages, mortgage-backed, a nd asset-backed 19,130Non-U. S . g o ve r nm e n ts a n d agencies 8,998

U . S . Go vern men t and agencies 6,903M u n i c i p a l s , m o n e y markets a nd p h y s i c a l commodities 6,912

In v e s t m e n t Securities ( i n c l u d e s $4 , 0 4 5 i n 2 0 0 8 a nd $4,685 i n2 0 0 7 m e a sure d a t f a i r v a l u e i n accordance w i t h SFAS N o . 1 5 9 )( i n c l u d e s s e c u r i t i e s pledged as c o l l a t e r a l t h a t can b e s o l d o rrepledged o f $7,152 i n 2 0 0 8 a nd $1 6 , 1 2 4 i n 2 0 0 7) 7 2 , 1 8 2

Total $ 2 6 1 , 5 4 0

Th e October 3 1 , 2 0 0 8 J o i n t Proxy Statement4 9 . I n a d d i t i o n t o t h o s e s t a t e m e n t s d e t a i l e d a b o v e , wh i ch we re e x p l i c i t l y i n c o r p o r a t e d

b y r e f e r e n c e i n t o t h e Proxy S t a t e m e n t , on o r a b o u t October 3 1 , 2 0 0 8 t h e p a r t i e s j o i n t l y i s s u e d t h e

Proxy S t a t e m e n t . As d e t a i l e d below, t h e Proxy Statement m i s r e p r e s e n t e d and f a i l e d t o inform

Bank of America s h a r e h o l d e r s of m a t e r i a l f a c t s concerning M e r r i l l Lynch' s b u s i n e s s , t r u ef i n a n c i a l c o n d i t i o n a nd t h e s u b s t a n t i a l r i s k s a s s o c i a t e d with M e r r i l l Lynch's a s s e t s . Th e cover

l e t t e r e n c l o s i n g t h e Proxy Statement wa s s i g n e d b y Defendants Th a i n a nd L e w i s .

5 0 . Th e Proxy Statement i d e n t i f i e d twelve d i s t i n c t "Risk F a c t o r s , " a t pa ge s 2 3

through 26 , a nd s t a t e d t h a t " s t o c k h o l d e r s should c o n s i d e r t h e m a t t e r s d e s c r i b e d b e l ow i n

determining whether t o a d o p t t h e merger agreem ent . " None of t h e Risk F a c t o r s i d e n t i f i e dprovided d i s c l o s u r e concerning t h e s p e c i f i c r is k t h a t M e r r i l l Lynch ' s a s s e t s were t o o complex

a nd i l l i q u i d t o v a l u e with a ny degree of s p e c i f i c i t y a nd t h a t t h e r e wa s a s u b s t a n t i a l r i s k t h a t t h e


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t r u e v a l u e of t h o s e a s s e t s were s u b s t a n t i a l l y l e s s t h a n t h e s t a t e d v a l u e , i m p a i r i n g t h e v a l u e of t h eMerger t o Bank of America s h a r e h o l d e r s .

5 1 . U n d e r t h e heading " Recent Developments " t h e Proxy Statement d i s c l o s e d t h a tBank of America h ad a g r e e d t o s e l l $ 1 5 b il l io n i n p r e f e r r e d s t o c k t o t h e U . S . Treasury p u r s u a n tt o t h e C a p i t a l Purchase Program ("CPP") t h a t wa s e f f e c t u a t e d a f t e r Congress passed t h eEmergency Economic S t a b i l i z a t i o n Act of 2008:

On October 3 , 2008, P r e s i d e n t Bush s i g n e d i n t o l a w t h e Em e rg e n c y Eco n om i cS t a b i l i z a t i o n Act of 2 0 0 8 ( t h e "EESA"). Pursuant t o t h e EESA, t h e U . S . Treasuryh a s t h e a u t h o r i t y t o , a m o n g o t h e r t h i n g s , i n v e s t i n f i na n c i a l i ns t i t u ti o ns a ndpurchase mortgages, mortgage-backed s e c u r i t i e s a nd c e r t a i n o t h e r f i n a n c i a li n s t r u m e n t s from f i n a n c i a l i n s t i t u t i o n s , i n an a g g r e g a t e a m ou nt u p t o $7 0 0 b i l l i o n ,f o r t h e purpo s e of s t a b i l i z i n g a nd providing l i q u i d i t y t o t h e U . S . f i n a n c i a l m a r k e t s .On October 1 4 , 2008, t h e U . S . Treasury announced a p l a n , r e f e r r e d t o a s t h eC a p i t a l Purchas e Program, o r t h e CPP, t o i n v e s t up t o $2 5 0 b i l l i o n of t h i s $7 0 0b i l l i o n a mount i n c e r t a i n e l i g i b l e U . S . b a n k s , t h r i f t s a nd t h e i r holding companiesi n t h e form of n o n - v o t i n g , s e n i o r p r ef e rr e d s t o c k i n i t i a l l y paying q u a r t e r l yd i v i d e n d s a t a 5% a n n u a l r a t e . I n t h e e v e n t t h e U . S . Treasury m ak e s any suchs e n i or p r e f e r r e d investment i n any co mp a ny i t w i l l a l s o r e c e i v e 1 0 - y e a r w a r r a n t st o a c q u i r e common s h a r e s of t h e co mp a ny h a vi ng a n a g g r e g a t e market p r i c e of15% of t h e amount of t h e s e n i o r p r ef e r r e d i n v e s t m e n t . I n connection withT r e a s u r y ' s 2 0 0 8 announcement, Bank of America wa s i d e n t i f i e d a s one of t h e n i n ef i n a n c i a l i n s t i t u t i o n s ( i n c l u d i n g M e r r i l l Lynch) t h a t a g r e e d i n p r i n c i p l e t op a rt i ci p a t e i n t h e f i r s t $125 b i l l i o n of Treasury i n v e s t m e n t s . As a r e s u l t , onOctober 2 6 , 2008, Bank of America e n t e r e d i n t o a purchase agreem ent with t h eU . S . Treasury p u r s u a n t t o which i t w i l l i s s u e t o t h e U . S . Treasury $15 b i l l i o n of an e w s e r i e s of p r e f e r r e d s t o c k of Bank of America. I n connection with t h i si n v e s t m e n t , Bank of America h a s a l s o a g r e e d t o i s s u e t o t h e U . S . Treasuryw a r r a n t s t o purchase approximate ly 73 m i l l i o n s h a r e s of Bank of Americacommon s t o c k a t an e x e r c i s e p r i c e of $30.79 p e r s h a r e . This investment i sexpected t o b e completed on o r about October 2 8 , 2 0 0 8 . I f t h e merger i scompleted p r i o r t o Treasury making a n investment i n M e r r i l l Lynch a s d e s c r i b e db e l ow under " - M e r r i l l Lynch & Co Developments - Unaudited - RecentDevelopments," Treasury w i l l purchase from Bank of America an a d d i t i o n a l $1 0b i l l i o n of a n e w s e r i e s of p r e f e r r e d s t o c k of Bank of America and r e c e i v e w a r r a n t st o purchase approximately 49 m i l l i o n s h a r e s , a l l on t h e s a m e terms a p p l i c a b l e t ot h e $15 b i l l i o n i n v e s t m e n t .


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5 2 . Th e Proxy Statement s i m i l a r l y d i s c l o s e d t h a t a t t h e p r e s e n t time M e r r i l l Lynchwould n o t p a r t i c i p a t e i n t h e CPP, pending t h e outcome of t h e Merger:

A f t e r d i s c u s s i o n s with Treasury a nd Bank of America, M e r r i l l Lynch h a sdetermined t h a t , i n v i ew of t h e pending merger with Bank of America, i t w i l l n o ts e l l s e c u r i t i e s t o t h e U . S . Treasury under t h e CPP a t t h i s t i m e , b u t may do s o i nt h e f u t u r e under c e r t a i n c i r c u m s t a n c e s . As a r e s u l t , M e r r i l l Lynch h a s e n t e r e d i n t oa purchase agreem ent t h a t p r o v i d e s f o r d e l a y e d s e t t l e m e n t f o r a s a l e of $1 0 b i l l i o nof a ne w s e r i e s of M e r r i l l Lynch p r e f e r r e d s t o c k a nd w a r r a n t s t o purchase64,991,334 s h a r e s of M e r r i l l Lynch Common Stock a t an e x e r c i s e p r i c e of $23.08p e r s h a r e . Th e agreem ent p r o v i d e s t h a t t h e c l o s i n g w i l l t a k e p l a c e on t h e e a r l i e r of( i ) t h e second b u s i n e s s da y f o l l o w i n g t e r m i n a t i o n of t h e M erger Agre e m e nt withBank of America and ( i i ) a d a t e d u r i n g t h e p e r i o d beginning on January 2 , 2 0 0 9a nd ending on January 3 1 , 2 0 0 9 i f t h e M erger Agre e m e nt i s s t i l l i n e ff ec t b u t t h emerger h a s n o t b e en completed b y t h e s p e c i f i e d d a t e , b u t, i n t h e c a s e of e i t h e r ( i )o r ( i i ) , i n no e v e n t l a t e r t h a n January 3 1 , 2 0 0 9 . I n a d d i ti o n , p ri o r t o January 2 ,2 0 0 9 , i f t h e M erger Agre e m e nt i s s t i l l i n e f f e c t b u t t h e merger i s n o t b e e ncompleted, M e r r i l l Lynch has t h e r i g h t , a f t e r c o n s u l t a t i o n with t h e F e d e r a lRe s erv e a n d Bank of America, t o r e q u e s t t h a t t h e U . S . Treasury con su m m a t e t h eCPP investment on o r p ri o r t o January 1 , 2 0 0 9 . Th e Purchase Agre e m e nt w i l lt e r m i n a t e a t 1 2 : 0 1 am on February 1 , 2 0 0 9 i f t h e investment h a s n o t b e e n m a d e b yt h a t d a t e .

Completion of t h e CPP investment p r i o r t o t h e t e r m i n a t i o n of t h e M erger Agre e m e nti s s u b j e c t t o Bank of America's a p p r o v a l . Bank of America h a s agreed i t w i l l n o tunreasonably withhold o r d e l a y i t s c o n s e n t . A f t e r January 1 , 2009, Bank of Americamay n o t withhold i t s c o n s e n t i f , a f t e r c o n s u l t i n g with Bank of America, M e r r i l lLynch reasonably d e t e r m i n e s t h a t t h e f a i lu r e t o o b t a i n t h e CPP investment wouldh ave a m a t e r i a l a d v e r s e impact on M e r r i l l Lynch. A f t e r January 3 0 , 2 0 0 9 u n t i l 1 2 : 0 1a . m . on February 1 , 2009, M e r r i l l Lynch w i l l h ave t h e u n il a t er a l r ig h t t o o b t a i n t h eCPP investment and Bank of America h a s consented i n advance t o t h e investment a ts uch ti me i f t h e merger h a s n o t b e e n completed a t t h a t d a t e .

On October 2 9 , 2 0 0 8 , M e r r i l l Lynch a nd Bank of America, N . A . , a wholly own e ds u b s i d i a r y of Bank ofAmerica, e n t e r e d i n t o a $1 0 b i l l i o n committed unsecured b a nkr e v o l v i n g c r e d i t f a c i l i t y with borrowings g u a r a n t e e d under t h e Temporary L i q u i d i t yGuarantee Program. This f a c i l i t y w i l l b e a v a i l a b l e t o M e r r i l l Lynch u n t i l January 3 0 ,2 0 0 9 b u t may e x p i r e a t an e a r l i e r d a t e i f t h e merger with Bank of America i st e r m i n a t e d o r con su m m a t e d p r i o r t o January 3 0 , 2 0 0 9 o r M e r r i l l Lynch e l e c t s t op a r t ic i pa t e i n t h e CPP. I f M e r r i l l Lynch p a rt i ci pa t e s i n t h e CPP, t h e proceeds r e c e i v e dfrom t h e U . S . Treasury w i l l b e used t o repay i n f u l l any o u t s t a n d i n g amounts owe dunder t h i s f a c i l i t y .


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5 3 . Th e Proxy Statement c o n t a i n e d s t a t e m e n t s from both companies h i g h l i g h t i n g t h ep o t e n t i a l b e n e f i t s of t h e Merger. Bank of America a r t i c u l a t e d numerous "Reasons f o r t h eMerger" a nd i n c l u d e d t h e "Recommendation of t h e Bank of America Board of D i r e c t o r s , " whichs t a t e d t h e f o l l o w i n g a t 54-55 (emphasis a d d e d ) :

Bank of Amer ica ' s Reasons f o r t h e Me rg e r; R e c o m m e n d a t i o n o f t h e Bank ofAmer ica Boar d of DirectorsTh e Bank of America board of d i r e c t o r s c o n s u l t e d with Bank of Americam a n a g e m e n t a s w e l l a s f i n a n c i a l a nd l e g a l a d v i s o r s a nd determined t h a t t h e mergeri s i n t h e b e s t i n t e r e s t s of Bank of America a nd Bank of America s t o c k h o l d e r s . I nr e a c h i n g i t s c o n c l u s i o n t o approve t h e merger a g r e e m e n t , t h e Bank ofAmerica boardc o n s i d e r e d a nu m b e r of f a c t o r s , i n c l u d i n g t h e f o l l o w i n g m a t e r i a l f a c t o r s : i t s understanding of Bank of America's b u s i n e s s , o p e r a t i o n s , f i n a n c i a l c o n d i t i o n ,e a r n i n g s and p r o s p e c t s a nd of Merrill Lynch' s business , o p e r a t i o n s , f i n a n c i a lcondition , earnings a nd p r o s p e c t s ; t h e f a c t t h a t a p p l i c a t i o n of such p o t e n t i a l expense s a v i n g s a nd o t h e rt r a n s a c t i o n - r e l a t e d assumptions and a d j u s t m e n t s t o t h e comb in e d n e t incomef o r e c a s t s f o r Bank of America and M e r r i l l Lynch m a d e b y v a r i o u s t h i r d - p a r t ybrokerage f i r m s and p u b l i s h e d a s consensus e s t i m a t e s b y F i r s t C a l l would r e s u l t i nt h e com bination being 3.0% d i l u t i v e i n 2 0 0 9 a nd breakeven i n 2010; t h e r e p o r t s of Bank of America m a n a g e m e n t and t h e f i n a n c i a l p r e s e n t a t i o n b y J . C .Flowers a nd FPK t o Bank ofAmerica's b oa rd o f d i r e c t o r s concerning t h e o p er a t i o n s ,f i n a n c i a l c o n d i t i o n and p r o s p e c t s of M e r r i l l Lynch a nd t h e expected f i n a n c i a l impactof t h e merger on t h e comb in e d company; t h e o p i n i o n s d e l i v e r e d t o t h e Bank of America b oa rd of d i r e c t o r s b y each of J . C .F l ower s a n d FPK t o t h e e ff ec t t h a t , a s of t h e d a t e of t h e o p i n i o n and b a s e d upon a nds u b j e c t t o t h e assumptions m a d e , methodologies used , f a c t o r s considered a ndl i m i t a t i o n s upon i t s review d e s c r i b e d i n i t s opinion and such o t h e r m a t t e r s a s J . C .Flowers a nd FPK c o n s i d e r e d r e l e v a n t , t h e exch ange r a t i o t o b e p a i d b y B a nk ofAmerica wa s f a i r , from a f i n a n c i a l p o i n t of v i ew , t o Bank of America;5 4 . I n d e s c r i b i n g t h e R e p r e s e n t a t i o n s a nd Warranties m a d e b y M e r r i l l Lynch a nd Bank

of America, t h e Proxy Statement a s s u r e d i n v e s t o r s t h a t t h e s e included d e t e r m i n a t i o n s t h a t no


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" m a t e r i a l a d v e r s e e f f e c t " h a s o c c u r r e d b etween t h e d a t e of t h e M e rg e r Ag r e e m e n t a nd t h e d a t e of t h ec l o s i n g of t h e M erger (emphasis a d d e d ) :

Th e merger agreem ent c o n t a i n s customary r e p r e s e n t a t i o n s and w a r r a n t i e s of M e r r i l lLynch a nd Bank of America r e l a t i n g t o t h e i r r e s p e c t iv e b u s i n e s s e s . With t h ee x c e p t i o n of c e r t a i n r e p r e s e n t a t i o n s t h a t must be t r u e a nd c o r r e c t i n a l l m a t e r i a lr e s p e c t s ( o r , i n t h e c a s e of s p e c i f i c r e p r e s e n t a t i o n s and w a r r a n t i e s r e g a r d i n g t h ec a p i t a l i z a t i o n of M e r r i l l Lynch, t r u e a nd c o r r e c t e x c e p t t o a de minimis e x t e n t ) , nor e p r e s e n t a t i o n o r warranty w i l l b e d e e m e d u n t r u e , i n a c c u r a t e o r i nc o r re ct a s aconsequence of t h e e x i s t e n c e o r absence of a ny f a c t , circumstance o r e v e n t u n l e s st h a t f a c t , circumstance o r e v e n t , i n d i v i d u a l l y o r w h e n t a k e n t o g e t h e r with a l l o t h e rf a c t s , circumstances o r e v e n t s , h a s h ad o r would r e a s o n a b l y b e expected t o h ave am a t e r i a l a d v e r s e e f f e c t on t h e company m ak in g t h e r e p r e s e n t a t i o n .Each ofBank of America a nd M e r r i l l Lynch h a s m a d e r e p r e s e n t a t i o n s and w a r r a n t i e st o t h e o t h e r r e g a r d i n g , a m o n g o t h e r t h i n g s :o c a p i t a l i z a t i o n ;

o f i n a n c i a l statements , i n t e r n a l c o n t r o l s and accounting o r a u d it i n g p r a c t i c e s ;

o t h e a b sence of material adverse changes;I n a d d i t i o n , M e r r i l l Lynch h a s m a d e o t h e r r e p r e s e n t a t i o n s a nd w a r r a n t i e s a b o u t i t s e l ft o Bank of America a s t o :o inve stment s e c u r i t i e s and com moditi es ;5 5 . Th e M erger Agreement, annexed t o t h e Proxy Statement a s Appendix A, i n c l u d e d

t h e f o l l o w i n g language i n paragraph 3 . 8 , t h e d e f i n i t i o n of " M a t e r i a l Adverse E f f e c t , " t h e o c c u r r e n c e

of which would a l l o w f o r t h e t e r m i n a t i o n of t h e M erger :3 . 8 Absence of C e r t a i n Changes o r Events . ( a ) S i n c e June 2 7 , 2008, no e v e n t o re v e n t s h ave o c c u r r e d t h a t h ave h ad o r would r e a s o n a b l y b e expected t o h a v e , e i t h e ri n d i v i d u a l l y o r i n t h e a g g r e g a t e , a M a t e r i a l Adverse E f f e c t on Company. As usedi n t h i s Agreement, t h e term " M a t e r i a l Adverse E f f e c t " m e a n s , with r e s p e c t t o P a r e n to r Company, a s t h e c a s e may b e , a m a t e r i a l adverse e f f e c t on ( i ) t h e f i n a n c i a lcondition , r e s u l t s of operations or b us ine ss of such party a nd i t s S u b s i d i a r i e staken a s a whole ( provided, however, t h a t , with r e s p e c t t o c l a u s e ( i ) , a " M a t e r i a lAdverse E f f e c t " s h a l l n o t b e d e e m e d t o i n c l u d e e f f e c t s t o t h e e x t e n t r e s u l t i n g from


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( A ) c h a n g e s , a f t e r t h e d a t e h e r e o f , i n GAAP o r r e g u l a t o r y accounting requirementsa p p l i c a b l e g e n e r a l l y t o companies i n t h e i nd u s tr ie s i n which such p a r t y and i t sS u b s i d i a r i e s o p e r a t e , ( B ) c h a n g e s , a f t e r t h e d a t e h e r e o f , i n l a w s , r u l e s , r e g u l a t i o n s o rt h e i n t e r p r e t a t i o n of l a w s , r u l e s o r r e g u l a t i o n s b y Governmental A u t h o r i t i e s ofg e n e r a l a p p l i c a b i l i t y t o companies i n t h e i n d u s t r i e s i n which such p a r t y a nd i t sS u b s i d i a r i e s o p e r a t e , ( C ) a c t i o n s o r omissions t a k e n with t h e p r i o r w r i t t e n c o n s e n tof t h e o t h e r p a r t y o r e x pr e s s l y r e q u i r e d b y t h i s Agreement, (D) changes i n g l o b a l ,n a t i o n a l o r r e g i o n a l p o l i t i c a l c o n d i t i o n s ( i n c l u d i n g a c t s of t e r r o r i s m o r war) o rg e n e r a l b u s i n e s s , economic o r market c o n d i t i o n s , i n c l u d i n g changes g e n e r a l l y i np r e v a i l i n g i n t e r e s t r a t e s , c u r r e n c y exchange r a t e s , c r e d i t markets and p r i c e l e v e l s o rt r a d i n g volume s i n t h e United S t a t e s o r f o r e i g n s e c u r i t i e s m a r k e t s , i n each c a s eg e n e r a l l y a f f e c t i n g t h e i n d u s t r i e s i n which such p a r t y o r i t s S u b s i d i a r i e s o p e r a t e a ndi n c l u d i n g changes t o any p r e v i o u s l y c o r r e c t l y a p p l i e d a s s e t marks r e s u l t i n gt h e r e f r o m , ( E ) t h e e x e c u t i o n of t h i s Agre e m e nt o r t h e p u b l i c d i s c l o s u r e of t h i sAgre e m e nt o r t h e t r a n s a c t i o n s contemplated h e r e b y , i n c l u d i n g a c t s of c o m p e t i t o r s o rl o s s e s of employees t o t h e e x t e n t r e s u l t i n g t h e r e f r o m , ( F ) f a i l u r e , i n a nd of i t s e l f , t om e e t e a r n i n g s p r o j e c t i o n s , b u t n o t i n c l u d i n g a ny u n d e r l y i n g c a u s e s t h er e o f o r ( G )changes i n t h e t r a d i n g p r i c e of a p a r t y ' s common s t o c k , i n and of i t s e l f , b u t n o ti n c l u d i n g a ny u n d e r l y i n g c a u s es , e x ce p t , with r e s p e c t t o c l a u s e s ( A ) , ( B ) and ( D ) , t ot h e e x t e n t t h a t t h e e f f e c t s of such change a r e d i s p r o p o r t i o n a t e l y a d v e r s e t o t h ef i n a n c i a l c o n d i t i o n , r e s u l t s of o pe r a t i o n s o r b u s i n e s s of such p a r t y a nd i t sS u b s i d i a r i e s , t a k e n a s a whole, a s compared t o o t h e r companies i n t h e i n d u s t r y i nwhich such p a r t y and i t s S u b s i d i a r i e s o p e r a t e ) o r ( i i ) t h e a b i l i t y o f s uc h p a r t y t ot i m e l y con su m m a t e t h e t r a n s a c t i o n s contemplated b y t h i s Agreement.

5 6 . During a s p e c i a l meeting on D e c e m b e r 5 , 2008, Bank of America Corporation

s h a r e h o l d e r s approved t h e a c q u i s i t i o n of M e r r i l l Lyn ch b y a u t h o r i z i n g t h e s h a r e s of commons t o c k t o b e i s s u e d i n t h e m e r g e r .

5 7 . D e s p i t e t h e f a c t t h a t Bank of America s h a r e h o l d e r s d i d n o t v o t e on t h e M ergeru n t i l D e c e m b e r 5 , 2008, a f t e r over t w o - t h i r d s of t h e f o u r t h q u a r t e r h ad p a s s e d , t h e Proxy

Statement wa s n o t u p d a t e d , c o r r e c t e d , a m e n d e d o r supplemented with any i n f o r m a t i o n

concerning t h e a c t u a l l o s s e s i n c u r r e d b y M e r r i l l Lynch d u r i n g t h e f o u r t h q u a r t e r of 2008, o r t h e

r i s k t h a t such l o s s e s c o u l d occur and would m a t e r i a l l y e f f e c t t h e v a l u e of Bank of America i f t h eMerger were consummated, g i v e n t h e n a t u r e of t h e a s s e t s a nd t h e l a c k of o r i n a b i l i t y of Bank of

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America t o do adequate due d i l i g e n c e t o v a l u e t h e a s s e t s . Nor wa s t h e Proxy Statement updatedo r c o r r e c t e d t o r e f l e c t t h a t owing t o l o s s e s i n c u r r e d b y M e r r i l l Lynch d u r i n g t h e f o u r t h q u a r t e r of2 0 0 8 , Bank of America would b e r e q u i r e d t o s e e k a d d i t i o n a l funding from t h e United S t a t e sTreasury Department.

5 8 . Th e f o r e g o i n g s t a t e m e n t s i n paragraphs 40 through 5 7 , c o n t a i n e d i n o ri n c o r p o r a t e d b y r e f e r e n c e i n t o t h e Proxy S t a t e m e n t :

a . misrepresented M e r r i l l Lynch ' s f i n a n c i a l r e s u l t s and f i n a n c i a l p o s i t i o n , i n c l u d i n gb y o v e r s t a t i n g t h e a s s e t s recorded on M e r r i l l Lynch ' s balance s h e e t a s of t h e t h i r d

q u a r t e r of2 0 0 8 ;b . m i s r e p r e s e n t e d t h e b e n e f i t s of t h e Merger, i n c l u d i n g t h e v a l u e of t h e a s s e t s t o b e

a c q u i r e d from M e r r i l l Lynch;c . m i s r e p r e s e n t e d , i n Defendant's T h a i n ' s s t a t e m e n t s i n t h e October 1 6 , 2 0 0 8 p r e s s

r el e a s e , t h a t M e r r i l l Lynch c o n t i n u e d t o "reduce exposures a nd d e - l e v e r a g e t h ebalance s h e e t " ;

d . o m i t t e d t o d i s c l o s e t h a t M e r r i l l Lynch' s f i n a n c i a l r e s u l t s , and l o s s e s on p r i n c i p a l

t r a n s a c t i o n s d u r i n g t h e f o u r t h q u a r t e r of 2008, were s u f f i c i e n t t o t r i g g e r t h e

t e r m i n a t i o n of t h e M erger due t o t h e occurrence of a m a t e r i a l a d v e r s e e f f e c t ;e . o m i t t e d i n f o r m a t i o n a b o u t t h e m a g ni tu de a nd impact of l o s s e s i n c u r r e d b y M e r r i l l

Lynch d u r i n g t h e f o u r t h q u a r t e r of 2008; andf . m i s r e p r e s e n t e d a nd o m i t t e d t o d i s c l o s e i n f o r m a t i o n concerning t h e p o t e n t i a l r i s k s

of a c q u i r i n g M e r r i l l Lynch a nd t h e p o t e n t i a l f o r f u r t h e r m a t e r i a l w r i t e - d o w n s ,i m pa i rm e nt s a n d l o s s e s on a s s e t s h e l d b y M e r r i l l Lynch.


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THE TRUTH I S REVEALED

5 9 . Events a nd d i s c l o s u r e s t h a t o c c u r r e d a f t e r t h e D e c e m b e r 5 , 2 0 0 8 v o t i n g on t h eMerger h ave r e v e a l e d t h e f o l l o w i n g , none of which wa s d i s c l o s e d t o Bank of Americas h a r e h o l d e r s :

a . M e r r i l l Lynch would r e c o r d a m as s i v e $15 b i l li o n l o s s i n t h e f o u r t h q u a r t e r of

2008, i t s l a rg es t l o s s i n any of p a s t s i x q u a r t e r s of c o n s e c u t i v e l o s s e s , a t t r i b u t a b l e

mostly t o l o s s e s i n c u r r e d on a s s e t s h e l d f o r t r a d i n g a nd recorded a s n e g a t i v e

revenue under " p r i n c i p a l t r a n s a c t i o n s " ;

b . Defendants h ave a d m i t t e d t h a t t h i s l o s s may h ave b e e n s u f f i c i e n t t o t r i g g e r t h e" m a t e r i a l a d v e r s e e f f e c t " c l a u s e i n t h e M erger Agreement, allowing Bank ofAmerica t o t e r m i n a t e t h e Me rg er; a nd

c . That t h e Defendants knew of t h e s e f a c t s and pursued a d d i t i o n a l funding under t h eCPP i n o r d e r t o complete t h e Merger.

6 0 . D e s p i t e h i s knowledge of M e r r i l l Lynch' s s t a g g e r i n g l o s s e s , and without r e v e a l i n g

th e m t o s h a r e h o l d e r s , Lewis f o r g e d ahead with t h e d e a l . On January 1 , 2009, Bank of Americacompleted i t s purchase of M e r r i l l Lynch. Defendant Lewis wa s s t i l l p o s i t i v e on t h e c l o s i n g of

t h e m e r g e r , s t a t i n g , "[w]e a r e now uniquely p o s i t i o n e d t o wi n market s h a r e and expand o u r

l e a d e r s h i p p o s i t i o n i n ne w markets around t h e w o r l d . "6 1 . On Thursday, January 1 5 , 2009, Th e Wall S t r e e t J o u r n a l r e p o r t e d t h a t Bank of

America would r e c e i v e a d d i t i o n a l funding under t h e CPP and t h a t such funding wa s sought

e a r l i e r i n D e c e m b e r b y Defendant L e w i s . Th e a r t i c l e a l s o r e p o r t e d t h a t t h e ma ssive f o u r t h

q u a r t e r l o s s e s a t M e r r i l l Lynch n e c e s s i t a t e d t h i s a d d i t i o n a l f u n d i n g :


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Th e U. S . government i s c l o s e t o f i n a l i z i n g a d e a l t h a t would g i v e b il l io n s i na d d i t i o n a l a i d t o Bank of America C o r p . t o h e l p i t c l o s e i t s a c q u i s i t i o n of M e r r i l lLynch & C o . , a c c o r d i n g t o people f a m i l i a r with t h e s i t u a t i o n .D i s c u s s i o n s over t h e s e f u n d s b e g a n i n m i d - D e c e m b e r w h e n Bank of Americaapproached t h e Treasury Department. Th e b a n k , a l r e a d y t h e r e ci p ie n t of $25b i l l i o n i n committed f e d e r a l r e s c u e f u n d s , s a i d t h a t i t wa s u n l i k e l y t o complete i t sJ a n . 1 purchase of t h e a i l i n g Wall S t r e e t s e c u r i t i e s f i r m b eca us e o f M e r r i l l ' sl a r g e r - t h a n - e x p e c t e d l o s s e s i n t h e f o u r t h q u a r t e r , a c c o r d i n g t o a person f a m i l i a rwith t h e t a l k s .

T r e a s u r y , concerned t h e d e a l ' s f a i lu r e could a f f e c t t h e s t a b i l i t y of U . S . f i n a n c i a lm a r k e t s , agreed t o work with t h e C h a r l o t t e , N . C . , l e n d e r on t h e " f o r m u l a t i o n of ap l a n " t h a t i n c l u d e s ne w c a p i t a l from t h e $7 0 0 b i l l i o n Troubled Asset R e l i e fProgram, according t o t h e person f a m i l i a r with t h e t a l k s . Th e a m ou nt a nd termsa r e s t i l l being f i n a l i z e d , t h i s person s a i d . D e t a i l s a r e expected t o b e announcedwith Bank of America's f o u r t h - q u a r t e r e a r n i n g s , due o u t Tuesday.Any p o s s i b l e arrangement might p r o t e c t Bank of America from l o s s e s on M e r r i l l ' sb a d a s s e t s . There would b e a ca p on t h e amount of l o s s e s t h e b a n k would h ave t oa b s o r b , with t h e f e d e r a l government being on t h e h ook f o r t h e r e m a i n d e r , s a i d oneperson f a m i l i a r with t h e m a t t e r . Both t h e F e d e r a l Reserve a nd t h e F e d e r a l DepositI n s u r a n c e C o r p . , a l o n g s i d e t h e T r e a s u r y , a r e involved i n t h e n e g o t i a t io n s , s a ypeople f a m i l i a r with t h e m .

Bank of America i s expected b y s o m e a n a l y s t s t o r e p o r t a l o s s f o r t h e f o u r t hq u a r t e r , o r a t l e a s t a s m a l l e r p r o f i t t h a n e x p e c t e d . I t i s n o t known e x a c t l y howm u c h M e r r i l l l o s t i n t h e s a m e time p e r i o d . M e r r i l l ' s problems l a r g e l y stem fromt h e d e t e r i o r a t i o n of a s s e t s on i t s books and t r a d i n g l o s s e s , s a i d a person f a m i l i a rwith t h e m a t t e r .

Th e d e a l b etween Bank of America a nd M e r r i l l wa s f o r g e d d u r i n g t h e h e c t i cweekend l a s t Septemb er t h a t s a w L e h m a n B r o t h e r s Holdings I n c . c o l l a p s e andg i a n t i n s u r e r American I n t e r n a t i o n a l Group I n c . s t a r t t o u n r a v e l . M e r r i l l ChiefExecutive John T h a i n , worried h i s f i r m would b e n e x t , p r e s s e d f o r a quick d e a l .I n t h e a f t e r m a t h of Bank of America's a c q u i s i t i o n of M e r r i l l - - valued a t $50b i l l i o n w h e n i t wa s a n no un ce d a nd worth $19.36 b i l l i o n w h e n i t c l o s e d - - i t s c h i e fe x e c u t i v e , Kenneth D. L e w i s , wa s viewed a s a s a v io r of t h e f i n a n c i a l - s e r vi c e si n d u s t r y , having rescued both M e r r i l l and Countrywide without governmenta s s i s t a n c e .

6 2 . Th e New York Times a l s o r e p o r t e d on January 1 5 , 2009, t h a t Defendants Lewis


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s e n t l a w y e r s t o New York i n D e c e m b e r t o e x p l o r e Bank of America's a b i l i t y t o t e r m i n a t e t h eMerger s i n ce M e rr i l l Lynch' s l o s s e s d u r i n g t h e f o u r t h q u a r t e r of 2 0 0 8 c o n s t i t u t e d a m a t e ri a la d v e r s e e f f e c t .

6 3 . Th e January 1 5 , 2 0 0 9 Th e New York Times a r t i c l e confirmed t h a t DefendantLewis h a d l e a r n e d of t h e l o s s e s , analyzed t h e m and t h e n scheduled a meeting f o r D e c e m b e r 1 7 ,2 0 0 8 , a m e r e twelve days a f t e r t h e M erger v o t e , with government o f f i c i a l s t o d i s c u s s t h e impactof t h e l o s s e s a l s o . Th e a r t i c l e a l s o r e p o r t e d t h a t prior t o t h a t D e c e m b e r 1 7 , 2 0 0 8 meeting withTreasury o f f i c i a l s , Defendant Le wi s h a d a t e l e p h o n e c a l l with F e d e r a l Reserve Ch arim a n

Bernanke t o d i s c u s s M e r r i l l Lynch's f o u r t h q u a r t e r l o s s e s . Th e New York Time s r e p o r t e d t h a t a tt h e D e c e m b e r 1 7 , 2 0 0 8 m e e t in g Defe n da nt Lewis sought a d d i t i o n a l f u n d s from t h e governmentand t o l d Treasury o f f i c i a l s t h a t M e r r i l l Lynch's f o u r t h q u a rt e r l o s s e s p u t t h e M erger i n" j e o p a r d y " ( emphas i s a d d e d ) :

Th e p r e p a r a t i o n s f or f u rt h er s u p p o r t c o m e a f t e r Bank of America's c h i e fe x e c u t i v e , Kenneth D. L e w i s , t o ld r e gu l a t o r s i n m i d - D e c e m b e r t h a t t h e shotgund e a l i t s i g n e d j u s t two months e a r l i e r with M e r r i l l Lynch wa s i n j e o p a r d y .B i l l i o n s of d o l l a r s i n write-downs on mortgages, commercial r e a l e s t a t e and o t h e rc r e d i t a s s e t s a t t h e brokerage f i r m climbed i n t o d o u b l e - d i g i t t e r r i t o r y i n t h e f o u r t hq u a r t e r , pushing M e r r i l l i n t o a s u b s t a n t i a l l o s s , s a i d a person who spokeanonymously because t h e y were n o t a u t h o r i z e d t o d i s c l o s e t h e i n f o r m a t i o n .F e a r i n g t h e i r own c a p i t a l base c o u l d n o t s u p p o r t M e r r i l l ' s f l a g g i n g a s s e t s ,e x e c u t i v e s a t Bank of America t o l d r e g u l a t o r s t h e y would need a s s i s t a n c e i no r d e r t o c l o s e t h e d e a l b y t h e i r t a r g e t d a t e of J a n . 1 .At one p o i n t i n December, Mr. Lewis even s e n t lawyers t o New York t o f i n dou t wh e t h e r M e r r i l l ' s s i t u a t i o n a m o u n t e d t o a material - adverse s i t u a t i o n t h a tm i g h t allow t h e b a n k t o cancel t h e deal , a c c o r d i n g t o a person f a m i l i a r with t h es i t u a t i o n .

As Mr. Lewis wa s l e a r n i n g a t t h e t i m e , M e r r i l l wa s s u f f e r i n g l o s s e s i n t h e f o u r t hq u a r t e r on a h o s t of c r e d i t - r e l a t e d p r o d u c t s , s a y people f a m i l i a r with t h e


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company's r e s u l t s . Whil e M e r r i l l Lynch Chief Executive John Th a in a nd TomMontag, t h e f i r m ' s g l o b a l h e ad of s a l e s and t r a d i n g , p o s i t i o n e d t h e s e l o s s e s a ss i g n i f i c a nt i n v a r i o u s meetings with m a n a g e m e nt, t h e y d e s c r i b e d t h e l o s s es a s"market r e l a t e d " a nd n o t o u t of s t e p with t h e r e s t of Wall S t r e e t , according t oa t t e n d e e s a t t h e s e m e e t i n g s .Mr. Thain o f t e n s t r e s s e d t h e l o s s e s were from s o - c a l l e d l e g a c y p o s i t i o n s and n o tne w ones t a k e n on b y Mr. Montag, according t o t h e s e p e o p l e . T o t a l M e r r i l l l o s s e scould t o t a l i n e x c e s s of $1 0 b i l l i o n , s a y people f a m i l i a r with t h e m a t t e r .

By Dec. 1 7 , Mr. Lewis went t o W a s h i n g t o n t o d i s c u s s w h a t h e h a d alreadyd i s c l o s e d t o Mr. Bernanke i n a n e a r l i e r phone c a l l - - t h a t h i s b a n k wa sh a v ing trouble d i g e s t i n g M e r r i l l ' s l o s s e s . Mr. Lewis described t h e l o s s e s a smonstrous , according t o a person f a m i l i a r with t h e matter.At t h a t 6 p . m . m e e t i n g , Mr. Be rna nke a n d M r. Pau l son both t o l d Mr. Lewis t h a tf a i l i n g t o complete t h e M e r r i l l a c q u i s i t i o n would b e d i s a s t r o u s . Th e p o l i c y makerss a i d abandoning t h e d e a l would f u r t h e r d e s t a b i l i z e m a r k e t s , and would h u r t t h eb a n k , p o t e n t i a l l y s e t t i n g o f f a r i p p l e e ff ec t t h a t would e x a c e r b a t e a f r a g i l es i t u a t i o n .

M e s s r s . Bernanke and Paulson a l s o urged Mr. Lewis t o f i n i s h t h e d e a l and n o tinvoke a m a t e r i a l - a d v e r s e change c l a u s e , s a y i n g i t wa s i n h is i n t e r e s t t o f i n i s h t h ed e a l . I f t h e y walked away, i t would r e f l e c t poorly on t h e b a nk and s u g g e s t i t h a d n ' tdone i t s due d i l i g e n c e and w a s n ' t f o l l o w i n g through on i t s commitments.

Th e p o l i c y makers t o l d Mr. Lewis t h a t i f c o n d i t i o n s were r e a l l y a s b a d a s heb e l i e v e d , t h e n t h e government c o u l d s t e p i n with a r e s c u e s i m i l a r t o t h a t used f o rC i t i g r o u p I n c . i n Nov e m b er. I n such an a r r a n g e m e n t , t h e government wouldprovide cash a nd g u a r a n t e e a g a i n s t p a r t of t h e f i r m ' s l o s s e s .

I n a d d i t i o n t o a c a p i t a l i n j e c t i o n from t h e T r e a s u r y , t h e F e d , Treasury and FDICa r e working on an a s s e t - g u a r a n t e e p l a n mod e l e d a f t e r t h e C i t i r e s c u e . Th egovernment may backstop a f i g u r e of $11 5 b i l l i o n t o $1 2 0 b i l l i o n i n Bank ofAmerica a s s e t s , with BofA a g r e e i n g t o t a k e a p o r t i o n of f i r s t l o s s e s , t h e Treasurya nd FDIC t a k i n g second l o s s e s , a nd t h e Fe d backstopping a l a r g e chunk of t h er e s t .Th e Treasury r e s c u e d e a l c o u l d b e announced a l o n g s i d e t h e b a n k ' s e a r n i n g s ,which h ave b e e n m o v e d up t o a F r i d a y r e l e a s e ."Bank of America d i d n ' t do proper due d i l i ge nc e , " s a i d Bradley Dorman,m a n a g i n g p a r t n e r a t W h a l e R ock P o i n t P a r t n e r s , a P r o v i d e n c e , R . I . , investment


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a d v i s e r with 315,000 s h a r e s i n t h e b a n k . He s a i d Mr. Lewis " p r o b a b l y jumped t h eg u n . 1 1

"There wa s a tremendous l a c k of t r a n s p a r e n c y , " a dd ed Jo hn Moore S r . , whoc o n t r o l s 18,000 s h a r e s and l iv es i n C h a r l o t t e , where i s c ha i rm a n o f commercialr e a l - e s t a t e f i r m Moore C o s . "As a s h a r e h o l d e r , w i t h o u t d i s c l o s u r e andt r a n s p a r e n c y i t i s extremely d i f f i c u l t t o m a k e a r e a s o n a b l e investment d e c i s i o n . "6 4 . Following t h e r e p o r t s of t h e need t o o b t a i n a d d i t i o n a l CPP funding i n l ig ht of

l o s s e s a t M e r r i l l Lynch, BAC s h a r e s d e c l i n e d b y $ 1 . 8 8 e a c h , o r 18.4%, t o c l o s e on January 1 5 ,2 0 0 9 , a t $ 8 . 3 2 .

6 5 . News r e p o r t s on January 1 6 , 2009, c o n t i n u e d t o r e f l e c t t h e impact of t h e

d e t e r i o r a t i o n of M e r r i l l Lynch ' s f i n a n c i a l c o n d i t i o n . On January 1 6 , 2009, Th e Wall S t r e e tJ o u r n a l r e p o r t e d on t h e CPP funding t o be r e c e i v e d b y BAC , i n c l u d i n g a $2 0 b i l l i o n investment

i n p r e f e r r e d s t o c k and " i n s u r a n c e " on $1 18 b il l io n i n a s s e t s . Th e a r t i c l e a l s o noted t h a t t h ec u r r e n t market v a l u e of t h e comb in e d Bank of America/Merrill Lynch wa s l e s s t h a n Bank ofAmerica's s t a n d a l o n e market v a l u e p r i o r t o t h e announcement of t h e Merger, implying t h a t t h e

market viewed M e r r i l l Lynch a s having n e g a t i v e v a l u e :Reeling from p r e v i o u s l y u n d i s c l o s e d l o s s e s from i t s M e r r i l l Lynch & Co.a c q u i s i t i o n , Bank of America C o r p . i s expected t o r e c e i v e an e m ergency c a p i t a li n j e c t i o n of $20 b i l l i o n from t h e T r e a s u r y , which w i l l a l s o backstop a s much a s$1 2 0 b i l l i o n of a s s e t s a t t h e b a n k , s a i d people f a m i l i a r with t h e p l a n .Reports of t h e unexpected M e r ri l l l o s s e s s e n t Bank of America s h a r e s t o t h e i rl o w e s t l e v e l s s i n c e 1 9 9 1 , and s e t o f f a n e w round of d e b a t e i n Congress about t h escope and mission of t h e T r e a s u r y ' s f i n a n c i a l - s y s t e m b a i l o u t s .

T h u r s d a y ' s 18% s t o c k - m a r k e t drop g i v e s t h e C h a r l o t t e , N . C . , b a nk a market v a l u eof $ 4 1 . 8 b i l l i o n , a s um b e l ow t h e $46 b il l io n i n s h a r e s i t o r i g i n a l l y o f f e r e d f o rM e r r i l l . I t s s h a r e s h ave l o s t over 40% of t h e i r v a l u e i n t h e p a s t seven t r a d i n gs e s s i o n s .

Th e developments angered s o m e Bank of America s h a r e h o l d e r s , who b e g a n t o


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q u e s t i o n why Chief Executive Kenneth Lewis d i d n ' t d i s c o v e r t h e problems p r i o rt o t h e S e p t . 1 5 d e a l announcement. Many a l s o wanted t o know why h e d i d n ' td i s c l o s e t h e l o s s es p r i o r t o t h e i r v o t e on t h e M er r il l d e a l on Dec. 5 , o r b e f o r ec l o s i n g t h e d e a l on J a n . 1 .

6 6 . I n a d d i t i o n t o t h e a r t i c l e a b o v e , t h e "Heard on t h e S t r e e t " column i n t h e January1 6 , 2 0 0 9 , Wall S t r e e t J o u r n a l i n c l u d e s t h e f o l l o w i n g commentary on t h e M erger (emphasisa d d e d ) :

Bank of America s h a r e h o l d e r s wh o voted f o r t h e M e r r i l l Lynch purchase must b ef ee l i ng a m i x of emotions r i g h t now. Among them: a n g e r .On Dec. 5 , h o l d e r s voted f o r t h e d e a l , which wa s i n i t i a l l y announced duringS e p t e m b e r ' s L e h m a n B r o t h e r s c r i s i s .On t h e da y of t h e v o t e , Chief Executive Kenneth Lewis s a i d BofA would h ave" t h e premier f i n a n c i a l - s e r v i c e s f r a n c h i s e . "

When t h e d e a l c l o s e d J a n . 1 , Mr. Lewis wa s s t i l l p o s i t i v e , s a y i n g : "We a r e nowuniquely p o s i t i o n e d t o wi n market s h a r e and expand our l e a d e r s h i p p o s i t i o n i nmarkets around t h e w o r l d . "

W h a t s h a r e h o l d e r s w e r e n ' t t o l d : From mid-December, BofA e x e c u t i v e s wered i s c u s s i n g with t h e Treasury p o s s i b l e e x t r a a i d t o s u p p o r t t h e M e r r i l l d e a l .

Since Merrill wa s going t o b e a b i g part of BofA, a nd s i n c e g o v e r n m e n t a i do f t e n hurts t h e i n t e r e s t s o f common shareholders, i n v e s t o r s ca n f e e laggrieved t h a t they weren't t o l d w h a t wa s going on b e h ind t h e s c e n e s .BofA's a c q u i s i t i o n of M e r r i l l looked o v e r - p r i c e d from t h e s t a r t . And Mr Lewis h a ss a i d h e w a s n ' t p r e s s u r e d b y t h e government i n t o a c q u i r i n g M e r ri l l o r Countrywide.Whil e i n s t i t u t i o n s were b a i l e d o u t f o r mistakes m a d e b e f o r e t h e c r e d i t crunch h i t ,BofA l o o k s s et t o b e r e s c u e d from overambitious d e a l s once i t wa s i n f u l l - s w i n g .6 7 . A January 1 6 , 2 0 0 9 a r t i c l e i n Th e New York Time s provided a d d i t i o n a l d e t a i l

a b o u t t h e d e a l with Treasury a nd f u r t h e r confirmed t h a t Bank of America c o n s i d e r e d t h e f o u r t hq u a r t e r l o s s e s a t M e r r i l l Lynch s u f f i c i e n t t o invoke t h e " m a t e r i a l a d v e r s e e f f e c t " c l a u s e i n t h e

Merger Agreement (emphasis a d d e d ) :


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Two weeks a f t e r c l o s i n g i t s purchase of M e r r i l l Lynch a t t h e urging of f e d e r a lr e g u l a t o r s , t h e g o v e rn m e n t c e m e nt e d a d e a l a t midnight Thursday t o supply Bankof America with a f r e s h $2 0 b il l io n c a pi t a l i n j e c t i o n a nd absorba s m u c h a s $ 9 8 . 2 b i l l i o n i n l o s s e s on t o x i c a s s e t s , a c c o r d i n g t o people involved i nt h e t r a n s a c t i o n .

Th e b a nk h ad b ee n p r e s s i n g t h e government f o r h e l p a f t e r i t wa s s u r p r i s e d t o l e a r nt h a t M e r r i l l would b e t a k i n g a f o u r t h - q u a r t e r write-down of $15 b i l l i o n t o $2 0b i l l i o n , according t o two people wh o h av e b ee n b r i e f e d on t h e s i t u a t i o n , i na d d i t i o n t o Bank of America's r i s i n g consumer l o a n l o s s e s .Even b e f o r e t h e most r e c e n t d e a l with M e r r i l l c l o s e d , t r o u b l e s b e g a n t o s u r f a c e . Att h e t i m e , s h a r e h o l d e r s l i k e d t h e s t r a t e g i c f i t of adding M e r r i l l Lynch, t h e n a t i o n ' sb i g g e s t brokerage f i r m , t o t h e n a t i o n ' s b i g g e s t b a n k . S t i l l , t h e y worried t h a t Mr.Le wi s h a d p a i d a h e f t y pr emium - - o r underestimated M e r r i l l ' s l o s s e s - - i n t h emerger s t i t c h e d t o g e t h e r over t h e mid-Septemb er weekend t h a t L e h m a n B r o t h e r sf i l e d f o r b a n k r u p t c y .When t h e d e a l wa s announced, Mr. Lewis s a i d t h a t h e h a d c o n s i d e r e d buyingM e r r i l l months e a r l i e r b u t wa s n o t comfortable with i t s mortgage e x p o s u r e . JohnA. T h a i n , t h e c h i e f e x e c u t i v e of M e r r i l l Lynch, s a i d he h ad c l e a n e d up m u c h of h i scompany's problems. "We h av e b ee n c o n s i s t e n t l y c l e a n i n g up t h e balance s h e e t ,r e pa i r in g t h e d a m a g e t h a t wa s done over t h e l a s t fe w y e a r s , " M r. Th a i n s a i d .Mr. Lewis p r a i s e d M r. Th a i n f o r d e c r e a s i n g r i s k s a t t h e f i r m and s a i d t h a t M e r ri l l' sc a pi t a l l e v el s were i n good s h a p e .

As i t t u r n e d o u t , more prob l e m s we r e l u r k i n g . I n Decemb er, w h e n e x e c u t i v e s a tM e r r i l l b e g a n t a l l y i n g l o s s e s on i t s mortgage i n v e s t m e n t s , t h e y were found t oexceed p r e v i o u s e s t i m a t e s . Th e write -downs w il l t o t a l b e twe en $ 15 b i l l i o n a nd$20 b i l l i o n , p o s s i b l y i t s l a r g e s t e v e r , a c c o r d i n g t o two people who h av e b ee nb r i e f e d on t h e s i t u a t i o n , a nd i n c l u d e mortgage a s s e t s , commercial r e a l e s t a t e a ndo t h e r c r e d i t i n v e s t m e n t s .

When i t n o t i f i e d Bank of America of such gaping write-downs, t h e b a nk b e c a m ef e a r f u l i t would n o t h ave t h e c a p i t a l t o c o v e r t h e m . Th e r e v e l a t i o n s , which c a m ej u s t weeks b e f o r e t h e merger wa s expected t o c l o s e , prompted Bank of America t oa s k t h e government f o r a d d i t i o n a l h e l p .Shortly before Christma s , Bank of Amer ica t o l d r e g u l a t o r s t h a t i t m i g h twalk a w a y from Merrill b ecause of mounting l o s s e s a t t h e brokerage . But t h er e g u l a t o r s , concerned M e r r i l l might f o u n d e r , urged Mr. Lewis t o p re s s a h e a d .Given t h e s e v e r it y of t h e s i t u a t i o n , government o f f i c i a l s s a i d t h e y needed t o t a k e


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immediate a c t i o n t o a v e r t a s y s t e m i c r i s k . Th e o f f i c i a l s agreed t o a n o t h e r c a p i t a li n f u s i o n and s a i d t h e y would g u a r a n t e e a s s e t s belonging t o both compani es.6 8 . Notwithstanding t h e e v i d e n t s t r e s s t o t h e f i n a n c i a l c o n d i t i o n of Bank of America

( a n d M e r r i l l Lynch) a nd t h e impact on t h e Merger, Defendants Le wi s a nd Th a in k e p t m a t e r i a ldevelopments, i n c l u d i n g M e r r i l l Lynch's ma ssive f o u r t h - q u a r t e r l o s s e s a nd write-downs, froms h a r e h o l d e r s u n t i l January 1 6 , 2 0 0 9 .

6 9 . Before t h e ope n in g of t h e f i n a n c i a l markets on January 1 6 , 2009, Bank ofAmerica r e p o r t e d i t s f i n a n c i a l r e s u l t s f o r f i s c a l 2 0 0 8 a nd t h e f o u r t h q u a r t e r of 2 0 0 8 . Bank ofAmerica's p r e s s r e l e a s e a l s o i n c l u d e d i n f o r m a t i o n concerning M e r r i l l Lynch's p r e l i m i n a r y f o u r t h

q u a r t e r 2 0 0 8 f i n a n c i a l r e s u l t s .7 0 . Th e Bank of America's January 1 6 , 2009, p r e s s r e l e a s e d i s c l o s e d M e r r i l l Lynch's

f o u r t h q u a r t e r 2 0 0 8 r e s u l t s :M e r r i l l Lynch p r e l i m i n a r y r e s u l t s i n d i ca t e a f o u r t h - q u a r t e r n e t l o s s of $ 1 5 . 3 1 b i l l i o n ,o r $ 9 . 6 2 p e r d i l u t e d s h a r e , d r i v e n b y s e v e r e c a p i t a l markets d i s l o c a t i o n s . (See t h eT r a n s i t i o n Update s e c t i o n of t h i s news r e l e a s e and supplemental e a r n i n g s i n f o r m a t i o nprovided on h t t p : / / i n v e s t o r . bankofamerica . c o m f o r f u r t h e r d e t a i l s . )I n v i ew of t h e c o n t i n u i n g s e v e r e c o n d i t i o n s i n t h e markets and economy, t h e U . S .government a g r e e d t o a s s i s t i n t h e M e rr i l l a c q u i s i t i o n b y m a ki n g a f u r t h e r investmenti n Bank of America of $20 b i l l i o n i n p r e f e r r e d s t o c k c a r r y i n g an 8 p e r c e n t dividendr a t e .I n a d d i t i o n , t h e government h a s agreed t o provide p r o t e c t i o n a g a i n s t f u r t h e r l o s s e son $1 1 8 b i l l i o n i n s e l e c t e d c a p i t a l markets e x p o s u r e , p r i m a r i l y from t h e formerM e r r i l l Lynch p o r t f o l i o . U n d e r t h e agreement, Bank ofAmerica would cover t h e f i r s t$10 b il l io n i n l o s s e s and t h e government would cover 9 0 p e r c e n t of a ny subsequentl o s s e s . Bank of Am e r i c a wo u l d pa y a pr emium of 3 . 4 p e r c e n t of t h o s e a s s e t s f o r t h i sprogram.T r a n s i t i o n UpdateM e r r i l l Lynch wa s a c q u i r e d on January 1 , 2 0 0 9 c r e a t i n g a premier f i n a n c i a l s e r v i c e s


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f r a n c h i s e with s i g n i f i c a n t l y enhanced wealth m a n a g e m e nt, investment banking a ndi n t e r n a t i o n a l c a p a b i l i t i e s .

M e r r i l l Lynch p r e l i m i n a r y r e s u l t s i n d i c a t e a f o u r t h - q u a r t e r n e t l o s s of $ 1 5 . 3 1 b i l l i o n ,o r $ 9 . 6 2 p e r d i l u t e d s h a r e , d r i v e n b y s e v e r e c a p i t a l markets d i s l o c a t i o n s .M e r r i l l Lynch' s Global Wealth M a n a g e m e n t d i v i s i o n g e n e r a t e d $ 2 . 6 b il l io n i n n e trevenue i n t h e p e r i o d a s f e e s h e l d up w e l l i n t h e d e c l i n i n g m a r k e t s . Th e s t r o n g e s tperformance c a m e from t h e U . S . Advisory p o r t i o n of t h e b u s i n e s s . R e t e n t i o n off i n a n c i a l a d v i s o r s remains c o n s i s t e n t with h i s to r ic a l t r en d s .

S i g n i f i c a n t n e g a t i v e f o u r t h - q u a r t e r i t e m s f o r M e r r i l l Lynch i n c l u d e :

- - C r e d i t v a l u a t i o n a d j u s t m e n t s r e l a t e d t o monoline f i n a n c i a l g u a r a n t o r exposures of$ 3 . 2 2 b i l l i o n .

- - Goodwill i m pa i rm e nt s of $ 2 . 3 1 b i l l i o n .- - Leveraged l o a n writedowns of $ 1 . 9 2 b i l l i o n .- - $ 1 . 1 6 b i l l i o n i n t h e U . S . Bank Investment S e c u r i t i e s P o r t f o l i o writedowns.- - Commercia l r e a l e s t a t e writedowns of $ 1 . 1 3 b i l l i o n .7 1 . I n E x h i b i t B t o t h e Fourth Q u a r t e r 2 0 0 8 Supplemental I n f o r m a t i o n , m a d e

a v a i l a b l e b y Bank of America on January 1 6 , 2009, Bank of America d i s c l o s e d t h a t d u r i n g t h ef o u r t h q u a r t e r of 2008, M e r r i l l Lynch h a d n e t n e g a t i v e revenue a t t r i b u t a b l e t o " p r i n c i p a l

t r a n s a c t i o n s " of $ 1 3 . 1 b i l l i o n a nd an a d d i t i o n a l $ 3 . 4 b i l l i o n i n n et l o s s e s under "Other" which

i n c l u d e d " l o s s e s on investment s e c u r i t i e s , p r i v a t e e q u i t y i n v e s t m e n t s , l o a n s and o t h e r

miscellaneous i t e m s . "

7 2 . Following Bank of America's January 1 6 , 2 0 0 8 announcement, t h e p ri c e p e r s h a r eof Bank of America's common s t o c k dropped f u r t h e r from i t s p r io r c l o s e of $ 8 . 3 2 p e r s h a r e , t oc l o s e on January 1 6 , 2 0 0 9 a t $ 7 . 1 8 p e r s h a r e , a d e c l i n e of 14%. Th e cumulative d e c l i n e on both

January 1 5 a nd January 1 6 , 2009, from t h e January 1 4 , 2 0 0 9 c l o s i n g p r i c e of $10.20 p e r s h a r e ,


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t o t a l s $ 3 . 0 2 , o r 3 1 %.7 3 . Th e e x t e n t of t h e l o s s e s i n c u r r e d a t M e r r i l l Lynch d u r i n g t h e f o u r t h q u a rt e r a r e

s t a g g e r i n g . Even i n t h e c o n t e x t of M e r r i l l Lynch's p r e v i o u s write-downs a nd l o s s e s over t h e p a s ts i x q u a r t e r s , t h e l o s s a t t r i b u t a b l e t o " p r i n c i p a l t r a n s a c t i o n s " i s g r e a t e r t h a n i n a ny of t h e p r i o rq u a r te rs , a s f o l l o w s :

2 0 0 7

P r i n c i p a l TransactionsReven u e ( L o s s ) ( m i l l i o n s )

3 r d Quarter 4 t h Quarter

( $ 5 , 9 3 0 ) ( $ 1 2 , 5 9 6 )

2 0 0 81 s t Quarter 2 n d Quarter 3 r d Quarter 4 t h Quarter

( $ 2 , 4 1 8 ) ( $ 4 , 083) ( $ 6 , 5 7 3 ) ( $ 1 3 , 1 0 9 )

7 4 . Th e n ews r e p o r t s f o l l o w i n g Bank of America's d i s c l o s u r e of t h e $15 b il l io n l o s sa t M e r r i l l Lynch r a i s e d f u r t h e r q u e s t i o n a s t o t h e accuracy a nd completeness of

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