BofA investor files to strip CEO of chairman job

Bank of America Chief Executive Officer Kenneth Lewis speaks at the Boston College CEO club luncheon in Boston, Massachusetts March 12, 2009.

NEW YORK/SAN FRANCISCO (Reuters) - Longtime Bank of America Corp (BAC.N) shareholder Jerry Finger launched on Monday his formal campaign to strip Chief Executive Kenneth Lewis of his job as chairman, saying the bank took too much risk by acquiring Merrill Lynch & Co.

Separately, two large U.S. pension funds sought to lead a class-action suit against the bank over the Merrill acquisition.

Finger urged shareholders to vote against reelecting Lewis, lead director O. Temple Sloan Jr and Jackie Ward to the bank's board of directors at the April 29 annual meeting. Ward chairs the board's asset quality committee.

Bank of America did not immediately return a request seeking comment. Finger is mounting his campaign at his own expense without a formal proxy solicitation, and announced it in a U.S. Securities and Exchange Commission notice.

The California Public Employees' Retirement System (CalPERS) and California State Teachers Retirement System (CalSTRS) filed a joint motion to the District Court of the Southern District of New York to be designated lead plaintiff in purported class actions against Bank of America stemming from the Merrill buy.

The first and third largest U.S. pension funds accused Bank of America of mis-stating or omitting crucial information about the financial health of Merrill as Bank of America shareholders voted on the deal.

Bank of America could not be reached immediately for comment on the accusations by the pension funds.

"Despite these challenging economic times, we can't give corporations a pass on their obligations to shareholders," Jack Ehnes, CalSTRS chief executive, said in a statement.

Plaintiffs lawyer Coughlin Stoia filed the suit against Bank of America in mid-February.

A spokeswoman for CalPERS said there are a number of purported class-action suits against Bank of America. It's common for a court to consolidate class-action suits under a lead plaintiff.

She declined to speculate on when the court might rule on the pension funds' filing.

Charlotte, North Carolina-based Bank of America agreed to acquire Merrill in September at a 60 percent premium, after less than 48 hours of talks.

The merger created the largest U.S. bank by assets. But Merrill lost $15.84 billion in the fourth quarter, and its condition prompted Bank of America in January to obtain a government bailout including $20 billion of new capital and a loss-sharing agreement on $118 billion of troubled assets.

Darren Robbins, a lawyer for Coughlin Stoia, said CalPERS' and CalSTRS' history as shareholder activists gave the case new heft.

"They have historically proven themselves to be advocates without precedent in connection with the prosecution of securities class actions," Robbins said.

"The damages here measure in the tens of billions of dollars," he said, declining to give a specific figure.

CalPERS, which owns 21 million shares of Bank of America, had $173 billion in assets as of January 31. Sister pension fund CalSTRS has a $114 billion portfolio.

DEAL STOKES SHAREHOLDER IRE

Finger accused Bank of America of overpaying for Merrill, and failing to disclose in a timely manner the extent of Merrill's losses once they became known.

He said the bank has demonstrated a "total disregard" for shareholder interests, and should focus more on controlling risk rather than on "increasing size, market share and geographic footprint."

Finger said his firm, Finger Interests Number One Ltd, owns about 1.1 million Bank of America shares. The Houston-based investor used to run Charter Bancshares Inc, which Bank of America predecessor NationsBank acquired in 1996.

Finger's reported stake is about 0.02 percent of Bank of America's shares outstanding.

Despite rising 26 percent on Monday to close at $7.80, Bank of America shares are 77 percent below where they were when the takeover was announced on September 15.

(Reporting by Jonathan Stempel; additional reporting by Peter Henderson and Gabriel Madway; Editing by Tim Dobbyn and Muralikumar Anantharaman)