NEW YORK (Reuters) - Investors want to lift the “shroud of secrecy” over the proposed $8.5 billion settlement of Bank of America Corp’s (BAC.N) mortgage-backed securities liability in the coming weeks, a lawyer said on Wednesday.
Dan Reilly, a Colorado lawyer representing American International Group Inc (AIG.N), told a New York federal judge that some investors want negotiations and documents over the deal to be made available to parties who have an interest.
“We want to come back to you and ask you to find it’s not confidential,” Reilly told U.S. District Court Judge William Pauley in Manhattan at a hearing for the judge to set a November 17 date to start evidence gathering and schedule arguments.
Reilly said that Bank of New York Mellon Corp (BK.N) , the trustee for hundreds of pools of mortgage-backed securities covered in the agreement, had asked the judge to withhold substantive rulings until an appeal is heard.
“A shroud of secrecy is being pushed back by asking you not to rule on anything,” he said.
Bank of New York Mellon says that the months-long negotiations that led to the proposed agreement were not secret as some investors contend. They include Walnut Place, which removed the case from state court to federal court, seeking to have it supervised under federal class action law.
Representatives of Bank of New York Mellon, Bank of America and the Gibbs Bruns law firm for 22 institutional investors who are part of the deal, all declined to comment on Thursday.
The settlement would resolve uncertainty for Bank of America over potential liabilities tied to pools of soured loans sold to investors by Countrywide Financial Corp, the mortgage lender it bought in 2008.
Countrywide was the largest U.S. mortgage lender before being taken over by BofA, a disastrous purchase analysts say has effectively cost more than $30 billion after accounting for lawsuits and writedowns.
A number of investors have objected to the proposed settlement, which Bank of New York Mellon Corp presented to a state judge in June for approval.
On October 19, Pauley ruled the case belonged in federal court. Bank of New York Mellon is seeking to appeal that decision.
The cases are re: The Bank of New York Mellon, New York State Supreme Court, New York County, No. 651786/2011; and The Bank of New York Mellon et al v. Walnut Place LLC et al, U.S. District Court, Southern District of New York, No. 11-05988.
Additional reporting by Grant McCool, editing by Bernard Orr