NEW YORK - (Mealey's) A federal judge in New York on Apr.
5 granted final approval of a $2.4 billion settlement between shareholders and
Bank of America Corp. (BoA) to settle claims that it and certain of its
executive officers and directors misrepresented the company's business and
financial condition, as well as the business and financial condition of
Merrill, Lynch & Co. Inc. prior to BoA's acquisition of Merrill (In
re: Bank of America Corp. Securities, Derivative, and ERISA Litigation,
No. 09-MDL-2058, S.D. N.Y.; See October 2012, Page 4).
According to a media relations source at shareholder law
firm Kessler Topaz Meltzer & Check, U.S. Judge Kevin Castel of the Southern
District of New York granted approval of the settlement from the bench.
No further information was provided.
After the Judicial Panel on Multidistrict Litigation
consolidated 31 separate but similar class action, derivative and Employee
Retirement Income Security Act lawsuits in the Southern District of New York on
June 10, 2009, five pension funds named as lead plaintiffs filed a consolidated
complaint in the District Court on behalf of all purchasers of BoA common stock
from Sept. 15, 2008, to Jan. 21, 2009, excluding "any shares of BoA common
stock acquired by exchanging the stock of Merrill Lynch & Co. Inc. for BoA
stock through the merger between the two companies consummated on January 1,
2009," who "held BoA common stock or 7% Cumulative Redeemable Preferred Stock,
Series B as of October 10, 2008, and were entitled to vote on the merger
between BoA and Merrill" or who "purchased BoA common stock issued under the
Registration Statement and Prospectus for the $10 billion offering of BoA
common stock that occurred on or about October 7, 2008, and were damaged
The lead plaintiffs named BoA and Merrill, as well as BoA
CEO Kenneth D. Lewis, former Chief Financial Officer Joe L. Price, Chief
Accounting Officer Neil A. Cotty and Merrill CEO John A. Thain (collectively,
the officer defendants), the BoA board of directors and underwriters Banc of
America and Merrill subsidiary Merrill Lynch, Pierce, Fenner & Smith Inc.
The lead plaintiffs alleged that the defendants violated
Sections 10(b), 14(a) and 20(a) of the Securities Exchange Act of 1934,
Securities and Exchange Commission Rules 10b-5 and 14a-9 and Sections 11, 12
and 15 of the Securities Act of 1933 by issuing a series of false and
misleading statements concerning BoA's due diligence in preparing its
multibillion-dollar acquisition of Merrill and its ensuing payment of millions
of dollars in executive year-end performance bonuses and compensation to
Merrill officers and directors. The lead plaintiffs sought damages and
costs associated with litigating the action.
On July 29, 2011, Judge Castel found that the lead
plaintiffs could bring securities fraud claims against Lewis and Price, saying
the plaintiffs sufficiently alleged that Lewis and Price acted recklessly when
they did not disclose to shareholders that Merrill was losing billions of
dollars. On Feb. 6, 2012, Judge Castel certified the class.
Soon after, Bank of America agreed to settle all claims
for $2.43 billion and institute a number of corporate governance policies.
The lead plaintiffs are represented by Robert N. Kaplan
and Frederic S. Fox of Kaplan Fox & Kilsheimer in New
York, Max W. Berger and Steven B. Singer of Bernstein Litowitz Berger
& Grossmann in New York and David
Kessler and Gregory M. Castaldo of Kessler Topaz Meltzer & Check in Radnor, Pa.
The defendants are represented by Mitchell A. Lowenthal
and Lewis J. Liman of Cleary
Gottlieb Steen & Hamilton in New York
and Peter C. Hein, Eric M. Roth, Joshua A. Naftalis, Kevin S. Schwartz and
Olivia A. Maginley of Wachtell
Lipton Rosen & Katz in New
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