BofA knew of AIG legal threat 'well in advance'

31 August 2011

Lawyers at Bank of America (BofA) knew of the legal threat posed by American International Group (AIG) well in advance of any action being taken, it has been revealed.

Reuters reports that sources with knowledge on the matter claimed the lender was aware in January this year - seven months prior to the lawsuit being filed - that the organisation was planning to sue it for more than $10 billion.

Despite this, the institute failed to make note of the action in a quarterly filing with the US Securities and Exchange Commission (SEC) that was made just four days before the event.

Richard Rowe, who used to act as a director of the SEC's Division of Corporate Finance, said: "Publicly owned companies are supposed to disclose material threatened litigation under generally accepted accounting principles."

However, the industry figure was not speaking specifically about the case of BofA and the news agency noted the SEC's rules regarding litigation disclosure are unclear - suggesting the bank, which has been in operation for more than 200 years, may have been justified in holding back the information.

By Tony Aynsley

Become a bobsguide member to access the following

1. Unrestricted access to bobsguide
2. Send a proposal request
3. Insights delivered daily to your inbox
4. Career development