Kaplan Fox & Kilsheimer LLP announces a $2.43 billion settlement of a class action lawsuit against Bank of America Corporation and Merrill Lynch & Company and certain current and former officers and directors for violations of federal securities laws in connection with Bank of America’s acquisition of Merrill Lynch. The proposed settlement also contemplates that Bank of America will institute certain corporate governance policies, including majority voting in director elections, annual disclosure of noncompliance with stock ownership guidelines, policies for a board committee regarding future acquisitions, the independence of the board’s compensation committee and its compensation consultants, and an annual “say-on-pay” vote by shareholders.
The proposed settlement is subject to the approval of the Honorable P. Kevin Castel in the United States District Court for the Southern District of New York, where the class action is pending under the caption In re Bank of America Securities, Derivative & Employment Retirement Income Security Act (ERISA) Litigation, 09-MD-2058 (PKC).
The class action was initially filed in 2009. The suit alleged that Bank of America, Merrill Lynch and certain current and former officers and directors violated federal securities laws, including Sections 10(b) and 14(a) of the Securities Exchange Act of 1934, by making materially false and misleading statements and failing to disclose material information in connection with the Bank of America shareholder vote on the acquisition. Specifically, Defendants were alleged to have withheld information concerning the dire financial condition at Merrill Lynch in the fourth quarter of 2008 and an undisclosed agreement between Bank of America and Merrill Lynch pursuant to which Merrill Lynch paid billions of dollars in bonuses to its employees prior to the close of the acquisition despite its deteriorated financial condition. When these facts were revealed in a series of disclosures in January 2009, Bank of America’s stock price plummeted. A trial was scheduled to start on October 22, 2012.
The $2.43 billion settlement is the largest securities class action settlement resolving a Section 14(a) claim and is the largest class securities class action settlement where executives of the defendant corporation were not criminally charged. The settlement is also one of the four largest settlements funded by a single corporate defendant for violations of federal securities laws.
Kaplan Fox attorneys working on this matter are: Robert N. Kaplan, Frederic S. Fox, Donald R. Hall, Hae Sung Nam, Melinda D. Campbell, Irina Kobylevsky and Damien H. Weinstein.