Judge Approves $2.43 Billion BofA Securities Fraud Class Action Settlement

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Judge Approves $2.43 Billion BofA Securities Fraud Class Action Settlement

By Sarah Pierce

A Manhattan federal judge has approved a historic $2.43 billion class action lawsuit settlement between Bank of America and shareholders irate over the acquisition of Merrill Lynch during the height of the 2008 financial crisis. Class Members have until April 25, 2013 to file a claim to be eligible for a payment from the settlement.

U.S. District Judge Kevin Castel granted final approval to the Bank of America class action settlement on Friday, making it the single largest securities class action settlement ever resolving a Section 14(a) claim — a provision designed to protect against misstatements in connection with a proxy solicitation.

The $2.43 billion settlement is also one of the four largest securities fraud settlements funded by a single corporate Defendant, and the largest securities fraud class action lawsuit settlement where executives of the Defendant were not criminally charged.

Shareholders sued Bank of America in 2009, alleging that the bank and some of its officers made false or misleading statements about the financial health of both companies when BofA announced plans to buy Merrill Lynch in a $20 billion deal in September 2008 — on the same weekend that Lehman Brothers collapsed.

Plaintiffs in the class action lawsuit say Bank of America shareholders voted to approve the Merrill Lynch acquisition without key information, including that Merrill would post $27.6 billion in losses that year. BofA subsequently asked for a $20 billion bailout from the government to help offset those losses, on top of the $25 billion it had already received.

When those material facts were finally disclosed in December, Bank of America’s stock price plunged.

“There was a general reference to losses, but never was the magnitude of those losses disclosed,” Ohio Attorney General Mike DeWine said at a press conference last September when the class action settlement was announced. “This would be akin to telling someone to watch out for a pothole when they were about to fall into the Grand Canyon.”

Class Members of the Bank of America securities fraud settlement include the following individuals:

• All persons or entities who held BofA common stock as of October 10, 2008 and were entitled to vote on the merger between BofA and Merrill;
• All persons or entities who purchased or otherwise acquired BofA common stock during the period from September 18, 2008 through January 21, 2009, inclusive, excluding shares acquired by exchanging stock of Merrill for BofA stock through the merger between the two companies consummated on January 1, 2009;
• All persons or entities who purchased or otherwise acquired January 2011 call options of BofA from September 18, 2008 through January 21, 2009, inclusive;
• All persons or entities who purchased BofA common stock issued under the Registration Statement and Prospectus for the BofA common stock offering that occurred on or about October 7, 2008.

Class Members that submit a valid Claim Form by the deadline of April 25, 2013 will receive an estimated payout of $0.43 per share before deduction of attorneys’ fees, costs and expenses.

Claim Forms and more information on your rights in the Bank of America Securities Fraud Class Action Lawsuit Settlement can be found at www.BoASecuritiesLitigation.com.

The case is In Re Bank of America Securities Derivative & Employment Retirement Income Sec. Act (ERISA) Litigation, Case No. 09-MDL-2058 (PKC), New York Southern District Court.

Updated April 9th, 2013

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