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Bank of America Securities Litigation

As announced on Sept. 28, 2012, the parties in the Bank of America consolidated securities class action reached an agreement to settle the action for $2.425 billion and Bank of America’s agreement to institute certain corporate governance policies.  The parties, however, still need to prepare the final detailed settlement documents and present the proposed settlement, including a proposed plan of allocation for the settlement proceeds, to the court for preliminary approval and authorization to send Notice of the settlement and Proof of Claim forms to potential class members.  It could be several months before the notice and proof of claim forms are disseminated.

 

If you received a copy of the Notice of Pendency of Class Action in the mail, which was mailed earlier this year, you are on the mailing list to receive a Notice of the Settlement and a Proof of Claim form.  If you did not receive a copy of the Notice of Pendency in the mail, please contact The Garden City Group, the notice and claims administrator retained for this action, toll-free at (855) 733-8308 to be added to the mailing list.  If you did receive a copy of the Notice of Pendency in the mail, but your address has changed, please contact The Garden City Group to update your mailing information. 

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Kessler Topaz is serving as co-lead counsel in this securities fraud class action arising out of the merger between Bank of America Corp. (“BoA”) and Merrill Lynch & Co (“Merrill”) announced on September 15, 2008 and which closed on January 1, 2009.  The case is pending in the Southern District of New York before the Honorable Denny Chin and is brought on behalf of all persons or entities who (i) purchased or otherwise acquired the common stock or January 11 call options of BoA between September 18, 2008 and January 21, 2009, and were damaged thereby; (ii) held BoA common stock as of October 10, 2008, and were entitled to vote on the merger between BoA and Merrill, and were damaged thereby; or (iii) 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 thereby.

Lead Plaintiffs in this matter include The State Teachers Retirement System of Ohio, The Ohio Public Employees Retirement System, The Teacher Retirement System of Texas, Stichting Pensioenfonds Zorg en Welzijn, represented by PGGM Vermogensbeheer B.V., and Fjärde AP-Fonden.  On September 25, 2009, Lead Plaintiffs filed their Consolidated Amended Class Action Complaint (“CAC”).  The CAC names as defendants BoA, Merrill, Kenneth J. Lewis, BoA’s CEO and Chairman during the Class Period, Joe Price, BoA’s CFO, Neil Cotty, BoA’s Chief Accounting Officer and Merrill’s interim CFO, John Thain, Merrill’s CEO, the BoA Board of Directors, and Banc of America Securities and Merrill Lynch Pierce Fenner Smith & Co., the underwriters for BoA’s $10 billion secondary stock offering.

The CAC alleges that the defendants violated the federal securities laws by failing to disclose, at any time prior to the close of the Merger, the following highly material facts:  (1) during the Merger negotiations, BoA and Merrill had secretly agreed to allow Merrill to pay, on an accelerated basis and prior to the close of the merger, up to $5.8 billion in bonuses to its executives and employees -- an amount which equaled 12% of the value of the Merger and 30% of Merrill’s shareholder equity; (2) Merrill had suffered losses in excess of $15 billion during October and November 2008 alone -- losses which were so severe that they caused senior BoA officers to internally debate invoking the material adverse change clause (“MAC”) in the Merger agreement prior to the shareholder vote on the Merger; (3) within days of the shareholder vote, BoA’s senior management, including Defendant Lewis determined to invoke the MAC because BoA could not absorb Merrill’s staggering losses; (4) BoA agreed to proceed with the Merger after the Secretary of the Treasury, Henry Paulson, threatened to fire BoA’s senior management and the Board if they invoked the MAC; and (5) BoA was only able to consummate the Merger because it received a $138 billion taxpayer bailout prior to the close of the Merger.

On August 27, 2010, Judge Castel entered an Order granting in part, and denying in part, Defendants’ Motions to Dismiss.  Specifically, the Court found that Lead Plaintiffs had stated a claim under Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 against “Lewis, Thain, BofA and Merrill for alleged misstatements related to the secret bonus arrangement, and against Lewis and BofA for alleged omissions related to the bonus arrangement.”  The Court also found that Lead Plaintiffs had stated a claim under the Section 14(a) of the Exchange Act and Rule 14a-9 against Lewis, Thain, BoA, Merrill and the BoA Directors in connection with the secret bonus arrangement.  In addition, the Court sustained Lead Plaintiffs’ control person claims under Section 20(a) of the Exchange Act, and found that Lead Plaintiffs had stated claims under Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 relating to the alleged misstatements and omissions concerning Merrill’s bonus payments.

On October 22, 2010, Lead Plaintiffs filed their Second Consolidated Class Action Complaint (“SAC”), which includes additional facts pertinent to Lead Plaintiffs’ claims under Section 10(b) of the Exchange Act relating to Defendants’ failure to disclose Merrill’s devastating fourth quarter losses.  These additional facts were ascertained from documents produced by defendants in compliance with the Court’s November 16, 2009 Order partially lifting the PLSRA discovery stay.  On July 29, 2011, Judge Castel entered an order largely sustaining Lead Plaintiffs’ claims.
 
Lead Plaintiffs moved to certify a class of Bank of America shareholders and investors on October 17, 2011.  Judge Castel granted Lead Plaintiffs’ motion in its entirety on February 6, 2012.

On June 3, 2012, after the conclusion of fact and expert discovery, Lead Plaintiffs moved for partial summary judgment.  Lead Plaintiffs’ motion is predicated on Ken Lewis’s admission during his deposition in this matter that certain information conveyed to shareholders and investors in the November 3, 2008 Joint Proxy Statement was no longer accurate as of December 5, 2008, the date that BoA shareholders voted to approve the Merger.

Trial is scheduled to begin on October 22, 2012.  For more information on the status of the litigation, and to access to certain information and materials regarding the substantive allegations, including copies of the CAC and SAC, please visit the BoA Securities Litigation website at http://www.boasecuritieslitigation.com.


Filed documents


For more information on the status of the litigation, and to access to certain information and materials regarding the substantive allegations, including a copy of the Complaint, please visit the Bank of America Securities Litigation Website at www.boasecuritieslitigation.com