B-of-A settles with shareholders for $2.4B

Posted on Sep 28, 2012 in Business | 0 comments

Bank of America says it will pay shareholders $2.43 billion to settle litigation in which it was accused of deceiving investors when it acquired Merrill Lynch.

Bank of America announced the acquisition in September 2008, as the financial meltdown was reaching its crest, saying it would pay $50 billion to acquire what it called Merrill’s “great global franchise.”

Merrill’s fortunes rapidly deteriorated by the time the transaction closed in January 2009 and Bank of America was subsequently hit with class action litigation alleging it papered over major losses at Merrill and provided shareholders with false and misleading information to win approval of the acquisition.

The $2.43 billion settlement announced Friday is the fifth-largest federal securities class action settlement, Stanford University law school Professor Joseph Grundfest told The New York Times.

Bank of America acknowledged the outcome will affect its results for the quarter, the newspaper reported.

Chief Executive Officer Brian T. Moynihan said in a statement the settlement was meant to “put these long-standing issues behind us.”

“Resolving this litigation removes uncertainty and risk and is in the best interests of our shareholders,” Moynihan said.

Copyright 2012 by United Press International