Bloomberg Anywhere Login


Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.


Financial Products

Enterprise Products


Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000


Industry Products

Media Services

Follow Us

Merrill Sued by South Korea’s Woori Bank Over CDO Losses

May 18 (Bloomberg) -- Bank of America Corp.’s Merrill Lynch unit was sued by Woori Bank over losses on $143 million in collateralized debt obligations, or CDOs.

Woori, based in Seoul, claimed in a complaint filed today in Manhattan federal court that Merrill defrauded it in a series of transactions in 2005 and 2006, selling interests in seven CDOs designed to move toxic mortgage assets off Merrill’s books.

Merrill used misleading credit ratings to hide the risks of mortgages underlying its CDOs and residential mortgage-backed securities, or RMBS, Woori said in the complaint.

“Defendants knew that the RMBS that they and other major banks were packaging into CDOs included a significant percentage of mortgages that violated basic underwriting standards and were likely to default,” Woori said in its complaint.

Bill Halldin, a Merrill spokesman, declined to comment on the suit. Merrill was acquired in 2009 by Charlotte, North Carolina-based Bank of America.

Unjust Enrichment

In its complaint, Woori claimed Merrill is liable for fraud, negligent misrepresentation and unjust enrichment. The Korean bank seeks damages of at least $143 million plus unspecified punitive damages.

Earlier this week, Woori filed a similar complaint against Citigroup Inc. over $95 million in CDO investments by the South Korean bank.

James Griffiths, a Hong Kong-based spokesman for New York-based Citigroup, called Woori’s allegations “totally without merit” and said the bank will defend itself in court.

“The Merrill Lynch and Citi complaints show that Wall Street bankers systematically disregarded their clients during the lead-up to the 2008 credit crisis,” Christopher Lebsock, a lawyer representing Woori, said in an e-mail today.

“The bankers clearly knew that the CDO machine they had created was unsustainable, but their short-term interest in profits and bonuses led them to pressure the ratings agencies, and others, into creating a false public impression that CDOs were a safe investment option,” Lebsock said.

Woori Bank is a unit of Woori Finance Holdings Co., South Korea’s largest financial company by assets.

The Merrill case is Woori Bank v. Merrill Lynch, Pierce, Fenner & Smith Inc., 12-cv-3993, U.S. District Court, Southern District of New York (Manhattan). The Citigroup case is Woori Bank v. Citigroup Inc., 12-cv-3868, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Bob Van Voris in federal court in Manhattan at

To contact the editor responsible for this story: Michael Hytha at

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.