Compliance March 24, 2009

Some BofA Shareholders Want Lewis Out

Bank of America (BofA) shareholders are trying to oust CEO Kenneth Lewis and two other board members, according to reports.
Reported by

A group that owns BofA stock is trying to get other shareholders to vote against re-electing Lewis, who is also chairman of the board, as well as Lead Director O. Temple Sloan and Jackie Ward, the Associated Press reported. The election of board members is scheduled to take place at BofA’s annual shareholders meeting on April 29.

BofA has been under increased scrutiny for acquiring Merrill Lynch because of $3.6 billion in bonuses doled out to Merrill executives right before the deal went through. The bonuses are being investigated by the New York attorney general’s office. Also, the more than $15 billion loss Merrill recorded in the fourth quarter has been under examination (see “Cuomo Says Merrill Accelerated Bonus Payments’ and “Merrill Executives Subpoenaed in Bonus Probe’).

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Finger Interests Number One Ltd., which owns about one-fifth of 1% of BofA stock, said in a regulatory filing that the board disregarded protecting the interests of shareholders during its purchase of Merrill Lynch, the AP reported. Finger Interests said shareholders were repeatedly misled by the board and not provided proper disclosures during the Merrill acquisition.

The bonuses led to the resignation of former Merrill CEO John Thain as head of wealth management at the combined bank (see “Thain to Leave Bank of America’).

BofA has received an additional $20 billion from the Troubled Asset Relief Program (TARP), in addition to the $25 billion it already received.

Finger Interests is also asking shareholders to approval proposals that would create an independent chairman of the board and allow for advisory voting by shareholders regarding executive compensation, according to the news report.

Another shareholder, Change to Win Investment Group, wants Lewis fired because of the Merrill deal, the AP reported. CtW Investor Group has said that if the bank does not remove Lewis, it will petition shareholders to vote against his re-election at the annual meeting.

The news comes the same day as reports that BofA will be sued by two large state pension funds over the controversial merger with Merrill (see “CA State Retirement Systems Seek to Lead BofA Class Action“).


Deals & People March 24, 2009

Stifel Nicolaus to Acquire up to 55 Branches from UBS

Stifel, Nicolaus&Company, Incorporated, will acquire up to 55 branches of UBS Wealth Management Americas from UBS Financial Services Inc. for an upfront cash payment of about $27 million, the company announced.
Reported by

The acquisition means that Stifel Nicolaus, the brokerage subsidiary of Stifel Financial Corp., with the added UBS branches, will have a combined 1,650 financial advisers, with $65 billion in assets under management (AUM).

The 55 branches are located in 24 states and employ 500 associates, including nearly 320 financial advisers with approximately $15 billion in assets under management, according to a press release. In 2008, these branches generated estimated total revenue of approximately $116 million, including approximately $100 million in compensable adviser revenue. All financial conditions are variable and to be based on the actual number of branches and advisers acquired, to be determined in approximately 35 to 45 business days, Stifel Financial said.

The company will also acquire $215 million in Reg U and Reg T loans and $1.7 billion in money market and FDIC insured balances. Stifel Financial said it expects the deal to close during the third quarter.

In addition to the $27 million payment, additional financial aspects of the deal include annual performance-based earn-out payments for two years following the closing of the transaction and aggregate payments of up to approximately $19 million for net fixed assets and employee forgivable loans. In addition to the above payments, Stifel Nicolaus has agreed to acquire other client related assets, and assume certain liabilities, associated with the branches acquired.

“The addition of these UBS branches represents a unique strategic fit. The addition of this talented group of professionals furthers our efforts to meet our goal of expanding across the country and further build upon Stifel’s recent growth achieved through our successful acquisitions and integrations of the Legg Mason Capital Markets Group in 2005, Ryan Beck in 2007 and Butler Wick last year,’ Stifel Chairman and Chief Executive Officer Ronald J. Kruszewski commented.

Jamie Price, Head of UBS Wealth Management Advisor Group, Americas, added, “This transaction is beneficial for both firms. It positions UBS to continue to gain market share in strategic markets which are key to our long-term growth. We also believe these branches will be able to integrate smoothly onto Stifel’s platform and the financial advisers would continue to grow and assist their clients in meeting their financial goals.’

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