April 21, 2012, 6:13 PM
Current, Former BofA Directors Agree to Settlement
By Dan Fitzpatrick
Current and former Bank of America Corp. directors and ex-Chief Executive Officer Kenneth Lewis have agreed to a $20 million settlement in one lawsuit alleging shareholders were wronged during the takeover of Merrill Lynch & Co, according to court documents.
The proposed agreement, which would resolve claims that directors breached their fiduciary duty to the bank when they didn’t inform investors about ballooning losses at the troubled New York securities firm, would not end all Merrill-related legal headaches for the Charlotte, N.C. lender. The U.S. District Court case is one of several similar suits pending before federal and state courts in New York and Delaware.
A federal judge in the Southern District of New York, Kevin Castel, has to approve the $20 million settlement between the directors, the Louisiana Municipal Police Employees Retirement System and the Hollywood Police Officers’ Retirement System. Lawyers for plaintiffs in a similar case pending in Delaware are challenging the pact in the federal case. Mr. Castel has asked the directors and plaintiffs in the federal case to show “why they should not be enjoined from consummating” the arrangement, according to a court document. The amount, $20 million, is small relative to the size of the claims because the pay out is designed to be covered by directors and officers liability insurance, said one person close to the case.
The spate of Merrill-related cases are threatening to drag out a out a painful period for a bank still weighed down by the decisions it made during the financial crisis. Chief Executive Officer Brian Moynihan recently sat for a deposition in a separate class action case that alleges shareholders were misled about the Merrill losses before the $19.4 billion purchase was approved. Defendants in that case included Mr. Lewis, former chief financial officer Joseph Price and directors.
The New York Attorney General’s Office is pursuing a separate civil fraud suit relating to the Merrill takeover that began under former Attorney General Andrew Cuomo. Defendants in that case include the bank, Mr. Lewis and Mr. Price.
wsj.com |
