* Bank accused of hiding Merrill losses, bonuses
* Settlement among largest tied to financial crisis
By Bernard Vaughan
NEW YORK, April 5 Bank of America Corp
on Friday won a federal judge's approval for a $2.43 billion
settlement with investors who said the lender hid crucial
information when it bought Merrill Lynch & Co.
The accord, among the largest investor settlements stemming
from the recent global financial crisis, was approved by U.S.
District Judge Kevin Castel in Manhattan.
Castel called the settlement "fair, reasonable and
adequate," and said it culminated an "extraordinarily
Bank of America had agreed to buy Merrill in an all-stock
deal initially valued at $50 billion on Sept. 15, 2008, the same
day that Lehman Brothers Holdings Inc went bankrupt.
But Merrill ended up losing $15.84 billion in that year's
fourth quarter, even as it awarded $3.62 billion of bonuses to
employees. Bank of America ultimately obtained a federal
bailout, since repaid, to absorb Merrill.
Shareholders including the State Teachers Retirement System
of Ohio and the Teachers Retirement System of Texas said
Merrill's mounting losses and bonus plans should have been
disclosed before investors voted on the merger in December 2008.
The accord with the second-largest U.S. bank was announced
in September, and won preliminary court approval in December.
"We are very proud of this result," Max Berger, a lawyer for
the plaintiffs, said at the hearing.
Bank of America denied the plaintiffs' allegations, but
Chief Executive Brian Moynihan has said the settlement would
remove uncertainty for the Charlotte, North Carolina-based bank.
Daniel Kramer, a lawyer for the bank, declined to comment at
the hearing. A spokeswoman, Jessica Oppenheim, did not
immediately respond to requests for comment after the hearing.
Since buying mortgage lender Countrywide Financial Corp in
July 2008 and Merrill six months later, Bank of America has
incurred more than $40 billion of extra costs for litigation,
writedowns and mortgage buybacks, analysts have said.
The company still faces a variety of litigation over its
mortgage operations, which have shrunk significantly in size,
and over its underwriting of mortgage securities.
Bank of America is among 17 banks and lenders facing
lawsuits by the Federal Housing Finance Agency over losses
suffered by Fannie Mae and Freddie Mac on
The FHFA has sued Bank of America over $57.5 billion of
securities, more than any other bank, that Fannie Mae and
Freddie Mac bought, and which were sponsored or underwritten by
Bank of America, Countrywide or Merrill.
Bank of America shares closed up 3 cents at $11.97 on the
New York Stock Exchange on Friday.
Castel also awarded three law firms representing the
plaintiffs about $160.5 million, including $152.4 million in
"The lawyers did a very fine job of keeping their eye on the
job," he said.
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,