April 21 Bank of America Corp directors,
who were sued by shareholders for allegedly paying too much for
Merrill Lynch & Co in 2008, must defend a proposed $20 million
settlement of the claims in federal court in New York, court
Calling the settlement "grossly inadequate," lawyers in a
similar Delaware case have asked P. Kevin Castel, the judge
overseeing the New York matter, to order the parties agreeing to
the deal to justify its terms.
Castel directed that parties submit necessary documents by
The New York Times first reported that the Delaware
plaintiffs objected to the settlement in New York as inadequate.
Damages in the case could reach $5 billion, according to the
plaintiffs in the case being handled in Delaware Chancery Court,
the paper said.
Larry Grayson, spokesman for BofA, declined to comment on
Lawyers in the Delaware case complained that if the
settlement in New York were approved, their clients' damages
claims would be wiped out ahead of a scheduled October trial,
the newspaper said.
Court papers show the settlement was struck on April 12 by
lawyers representing two public employee pension funds that had
sued the directors of Bank of America for breach of fiduciary
duty. The funds are the Louisiana Municipal Police Employees'
Retirement System and the Hollywood Police Officers' Retirement
System in Florida.
Bank of America has been the subject of much litigation over
Merrill, including its failure to more quickly disclose that
Merrill was on its way to losing $15.8 billion in the fourth
quarter of 2008 and was also paying out $3.6 billion in bonuses
Castel's colleague in New York, Judge Jed Rakoff, grudgingly
approved a $150 million settlement by the bank of U.S.
Securities and Exchange Commission civil charges over the
Merrill takeover, after earlier rejecting a $33 million accord