Jan 11 Bank of America Corp directors
have reached a $62.5 million settlement to resolve investor
claims over the bank's acquisition of Merrill Lynch & Co, a
person familiar with the matter said, after a federal judge
expressed reservations about an earlier version of the accord.
U.S. District Judge Kevin Castel in Manhattan on Friday
agreed to increase the size of the settlement from $20 million,
the person said.
This came after Castel had indicated in a Jan. 4 order that
he had yet to be persuaded of the fairness of the settlement,
which also includes governance reforms.
Castel also suggested in that order that "some, most or all"
of the $20 million cash payout would have been consumed by
attorney's fees for the plaintiffs.
The accord is separate from a $2.4 billion settlement that
the Charlotte, North Carolina-based lender reached in September
to resolve securities fraud litigation over the Merrill
Bank of America said in a statement about Friday's
developments: "We support the terms of the settlement, and are
gratified that the matter has been resolved."
The case was led by two pension funds, the Louisiana
Municipal Police Employees' Retirement System and the Hollywood
Police Officers' Retirement System in Florida.
Albert Myers and Joseph White, who represent the pension
funds, did not immediately respond to requests for comment.
The settlement resolved claims that Bank of America
directors including former Chief Executive Kenneth Lewis misled
shareholders about Merrill's losses, which peaked at $15.84
billion in the fourth quarter of 2008, and that Merrill was
paying $3.6 billion of bonuses at the time.
Payouts would go to the bank, not to shareholders. Directors
of publicly-traded companies typically have liability insurance
to cover a variety of payouts in derivative lawsuits.
The case is: In re: Bank of America Corp Securities,
Derivative, and Employee Retirement Income Security Act (ERISA)
Litigation, U.S. District Court, Southern District of New York,