BofA (BAC) Lawyers Knew About AIG (AIG) Suit Months in Advance
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According to Reuters Tuesday afternoon, Bank of America's (NYSE: BAC) top lawyers may have known as early as January that AIG (NYSE: AIG) was going to issue a massive suit (filed August 8th).
Something for investors to consider: how does such a material event not get disclosed in quarterly regulatory filings? Under U.S. GAAP, public corporations are required to disclose any material threatened litigation. The SEC allows bank executives to make a judgment call about what is material; if threatened litigation is material, however, and a financial impact can be estimated, it should be disclosed.
Investors have certainly had ups and downs with BofA management. The bank is becoming notorious for under-addressing or under-disclosing mortgage-related issues.
Though the SEC has been clamping down as of late, some leeway has been given to expected costs of early-stage litigation or threatened litigation if the outcome is more difficult to predict.
Whether BofA was able to predict or estimate how big the outcome might have been... you can almost bet that if you're BofA and AIG is coming at you, it's not going to be a love tap.
BofA shares are down 2.8 percent Tuesday.
Something for investors to consider: how does such a material event not get disclosed in quarterly regulatory filings? Under U.S. GAAP, public corporations are required to disclose any material threatened litigation. The SEC allows bank executives to make a judgment call about what is material; if threatened litigation is material, however, and a financial impact can be estimated, it should be disclosed.
Investors have certainly had ups and downs with BofA management. The bank is becoming notorious for under-addressing or under-disclosing mortgage-related issues.
Though the SEC has been clamping down as of late, some leeway has been given to expected costs of early-stage litigation or threatened litigation if the outcome is more difficult to predict.
Whether BofA was able to predict or estimate how big the outcome might have been... you can almost bet that if you're BofA and AIG is coming at you, it's not going to be a love tap.
BofA shares are down 2.8 percent Tuesday.
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