Sun, Apr 07, 2013 - Page 13 News List

BofA lawsuit settlement of US$2.43bn approved

AP, NEW YORK

A New York judge has approved Bank of America Merrill Lynch’s (BofA Merrill Lynch) US$2.43 billion settlement of a class-action lawsuit brought by shareholders over the company’s acquisition of former competitor Merrill Lynch.

A judge for the US District Court for the Southern District of Manhattan approved the settlement on Friday. The bank proposed the settlement in late September last year. The agreement resolves allegations that Bank of America did not disclose the state of its finances or those of Merrill Lynch when it agreed to buy Merrill in September 2008.

BofA Merrill Lynch said in September last year that it rejected the allegations and was agreeing to the settlement to end the uncertainties, burden and costs associated with the lawsuit.

The Charlotte, North Carolina, company agreed to buy Merrill Lynch for US$20 billion in stock at the height of the financial crisis. The deal was struck the same weekend that Lehman Brothers collapsed. BofA Merrill Lynch later disclosed that Merrill Lynch was going to take US$27.6 billion in losses that year. BofA Merrill Lynch later asked for a US$20 billion bailout from the federal government to help counteract those losses. It had already received US$25 billion in bailout funds.

The Securities and Exchange Commission won a US$150 million settlement from BofA Merrill Lynch in 2009 to resolve charges the company misled shareholders about the acquisition.

The SEC said BofA Merrill Lynch failed to tell shareholders it had authorized Merrill to pay as much as US$5.8 billion in bonuses to its employees in 2008 before shareholders voted on the acquisition. The deal closed in early 2009.

This story has been viewed 1361 times.
TOP top