Bank of America’s top lawyer lacked active license

It turns out that the executive, Brian T. Moynihan, was not authorized to practice law when he was named the company’s top lawyer last December. During that time, Bank of America was reviewing numerous legal issues related to its Merrill purchase and request for billions of dollars more in US taxpayer aid to cover Merrill’s losses. Moynihan, who was registered as an inactive attorney in Massachusetts, updated his license to active status in Massachusetts on Dec. 18, eight days after his appointment as general counsel.

It is unclear whether Moynihan’s inactive status will affect any major business decisions or transactions Bank of America made during that eight-day period.

A congressman investigating Bank of America’s Merrill purchase said Moynihan’s lapsed legal standing is another odd twist in the case. New York Democrat Edolphus Towns, chairman of the House Committee on Oversight and Government Reform, noted that Bank of America abruptly replaced its then-general counsel, Timothy J. Mayopoulos, with Moynihan on Dec. 10. Mayopoulos told congressional investigators he had concluded Bank of America did not have a valid legal reason to cancel the Merrill deal.

“In light of all the facts we now know, this is certainly worth a closer look,’’ Towns said of Moynihan’s legal standing. “What was the rush to fire the old lawyer and replace him with someone who apparently wasn’t even licensed to practice law?’’

A spokesman for Bank of America, Lawrence Di Rita, denied there was a problem, noting that Moynihan quickly updated his license with the Massachusetts board that regulates attorneys while making the transition to his new position.

“The expeditious notification to the [state] was reasonable, timely, and appropriate, and any suggestion otherwise is groundless and speculative,’’ Di Rita said.

Moynihan served as general counsel for just six weeks, and has since been promoted to head the company’s consumer banking business. He is also a candidate to be the chief executive of Bank of America when Ken Lewis retires at the end of this year.

Moynihan is a graduate of Notre Dame Law School and practiced law in two states, Rhode Island and Massachusetts. In 1993 he joined Fleet Financial Group Inc. as deputy general counsel, but had moved on to hold nonlegal executive positions by the time the bank was sold to Bank of America in 2004.

In 2005 he changed his status as a practicing attorney to “inactive’’ with Massachusetts and Rhode Island regulators. In Massachusetts, inactive lawyers pay only half the $220 annual registration fee.

But inactive lawyers are legally barred from practicing law in Massachusetts, except for pro bono work. Michael Fredrickson, general counsel to the Massachusetts Board of Bar Overseers, said internal corporate counsels are required to be active licensed attorneys, but declined to comment on Moynihan’s situation in particular. The New York Post first reported yesterday Moynihan’s status as an inactive attorney.

After becoming general counsel, Moynihan was immersed in many facets of the Merrill deal. On Dec. 17, he accompanied Lewis and another top executive to meet with Federal Reserve Bank chairman Ben Bernanke and Henry Paulson, then the US Treasury secretary, to warn them that Bank of America was considering canceling the Merrill deal.

Moynihan’s status is particularly complicated because he lives in Massachusetts and often worked in both Boston and New York for a national bank that is incorporated in Delaware and headquartered in Charlotte, N.C., which makes it hard to determine which state rules would apply.

Richard M. Gelb, a Boston securities lawyer, said it is possible a state attorney general could pursue charges against Moynihan if it turns out he gave legal advice while an inactive member of the bar. New York’s attorney general, Andrew Cuomo, is already investigating the Bank of America-Merrill deal. His office did not respond to a request for comment.

Gelb said investors should be notified if a company’s new general counsel is not licensed and had not practiced law in some time, especially one in the midst of handling a major deal such as the Merrill transaction. Bank of America’s announcement of Moynihan’s appointment to general counsel did not disclose that his law license was inactive.

“It would be material for me to know about it,’’ said Gelb, a partner for Gelb & Gelb LLP.

Moynihan is again not practicing law for Bank of America, and so when he updated his registration with Massachusetts earlier this year, he changed his legal status back to “inactive.’’

Todd Wallack can be reached at twallack@globe.com.