Here's an important piece of the puzzle as to why Bank of America (BAC) failed to inform its shareholders about big losses at Merrill Lynch: Executives relied on a faulty analysis by their lawyers.

Fortune reports Bank of America executives decided not to reveal to shareholders the depth of the fourth quarter losses at Merrill Lynch in part because its lawyers at Wachtell, Lipton, Rosen & Katz provided a "forecast" of losses that "omitted projected losses in November and December from Merrill's portfolio of CDOs (collateralized debt obligations) and other illiquid assets." That led to a forecast of losses that were way below the actual $18 billion.

Merrill Lynch executives have said the document was not intended to be an accurate forecast. So you have to wonder what it's purpose was? To obscure? We may never know what really happened, but Bank of America was the business owner in all this, and it's fair to assign it the burden of responsibility. 

For more:
- here's the article

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