Bank of America (BOA) [corporate website] announced Friday that it has agreed to pay $2.43 billion [press release] to settle a class action lawsuit with investors over its $18.5 billion acquisition of Merrill Lynch [corporate website] in January 2009. Investors alleged that BOA failed to disclose information about Merrill and made misrepresentations about Merrill's financial health. BOA stated that it denied these allegations but chose to settle because it was in the best interests of its shareholders to avoid a lengthy and expensive legal battle. The proposed settlement will be reviewed by the US District Court for the Southern District of New York [official website]. As a part of the settlement, BOA has agreed to institute new corporate governance policies. Commentators stated that the settlement was unexpectedly large [Bloomberg report] given the historical context and that this and several other suits have been major hits to BOA.
BOA has had a contentious litigation history recently. In July BOA to pay $375 million [JURIST report] in a settlement with bond insurer Syncora Guarantee [corporate website] over claims that Syncora was misled into insuring toxic mortgage-backed securities of BOA-owned Countrywide Financial Corporation [NYT backgrounder]. Also that month a federal judge rejected [JURIST report] a motion by BOA to dismiss a shareholder lawsuit alleging BOA's purposeful concealment of the bank's exposure to billions of dollars in loan repurchase claims and its problematic reliance on an electronic loan registry. In December BOA reached a $315 million settlement of claims brought by investors alleging they were misled with respect to mortgage-backed investments, and a $335 million settlement [JURIST reports] with the Department of Justice, relating to discriminatory lending practices. In June 2011 BOA announced an $8.5 billion settlement [JURIST report] agreement arising from claims that it had sold bad securities that contributed to the housing market collapse.