Los Angeles, CA: A securities class action lawsuit settlement against Bank of America Corp (BoFA) is upheld, and will see BoFA pay a record $2.4 billion to class members who alleged fraud over the bank' acquisition of Merrill Lynch & Co at the height of the financial crisis in 2008.
The settlement was approved by the Second Circuit on Wednesday. It was originally approved in April 2013 by US District Judge Kevin Castel, who called the deal "fair, reasonable and adequate."
The securities lawsuit alleged BoFA and its top executives misled shareholders about its financial health and that of Merrill Lynch before the merger closed in January 2009. Specifically, the plaintiffs claimed they were not told at the time that Merrill Lynch faced projected losses of more than $21 billion in the fourth quarter of 2008; that some Bank of America executives who were aware of the losses had attempted to thwart the merger; and that Merrill Lynch had paid its executives $3.6 billion in bonuses. When those facts became known, BoFA' stock price plunged by over half in just 11 days.
The case is In re Bank of America, case number 13-1573, in the U.S. Court of Appeals for the Second Circuit.
