Bank of America Corp. has agreed to pay $2.43 billion to settle alleged federal securities law violations in Bank of America’s acquisition of Merrill Lynch & Co. Inc. in 2009.
A group of state and foreign pension funds sued Bank of America in 2009, accusing the company of making false statements about its health and the health of Merrill Lynch. The settlement, subject to approval by U.S. District Judge P. Kevin Castel of the Southern District of New York, was announced Friday, less than a month before a trial was scheduled to begin in the Southern District of New York.
According to a joint statement by the plaintiff pension groups, the settlement is the largest of its kind to resolve a claim for alleged misstatements in connection with an attempt to secure shareholder votes. It’s also believed to be one of the four largest settlements funded by a single corporate defendant for violation of federal securities laws.
“Not only did we accomplish an excellent financial recovery, but other companies will look at the result here and think twice about not fully disclosing all necessary information to their shareholders,” Ohio Attorney General Mike DeWine said in a written statement. Ohio, Texas, Dutch and Swedish pension funds served as lead plaintiffs in the case.
Bank of America, in a written statement, continued to deny any wrongdoing. “Resolving this litigation removes uncertainty and risk and is in the best interests of our shareholders,” CEO Brian Moynihan said.
The plaintiffs were represented by Bernstein Litowitz Berger & Grossmann, Kaplan Fox & Kilsheimer and Kessler Topaz Meltzer & Check. Attorneys and representatives from those firms either declined to comment, referring questions to the plaintiff pension funds, or could not be reached. Saxena White represents plaintiffs in an accompanying derivative case separate from the settlement announced Friday.
Bank of America has been represented by Paul, Weiss, Rifkind, Wharton & Garrison; Cleary Gottlieb Steen & Hamilton; and Wachtell, Lipton, Rosen & Katz. As reported by Legal affiliate The Am Law Litigation Daily, Paul Weiss joined the defense team in April after Bank of America suffered losses on several important motions, including failure to defeat class certification.
Bank of America announced its proposed acquisition of Merrill Lynch in September 2008. The plaintiffs accused Bank of America of failing to disclose billions of dollars in financial losses that Merrill Lynch had suffered before the shareholders voted. Shareholders voted for the acquisition in December 2008.
Zoe Tillman is a reporter for The National Law Journal, a Legal affiliate based in New York. •