Former brokers of Bank of America Corp.’s Merrill Lynch & Co. unit asked a federal judge to approve a $40 million settlement in a lawsuit over deferred compensation.
Charles McCallum, a lawyer for the brokers, told U.S. District Judge Alison Nathan today in Manhattan federal court that the proposed settlement would cover more than 1,400 people. The judge said she will rule later on preliminary approval.
The lawsuit, filed by Scott Chambers and John Burnette, relates to Bank of America’s 2009 purchase of the investment firm. The brokers alleged in their complaint that they were entitled to cash distributions stemming from a change in control of Merrill Lynch.
“We’re hopeful, given the nature of the settlement and the amount involved, the settlement will be well-received,” McCallum told the judge.
William Halldin, a spokesman for Charlotte, North Carolina-based Bank of America, said in a phone interview today that the company “agreed to a resolution to avoid the cost and distraction of what would likely be continued, lengthy litigation.”
Not all of the brokers who would be covered by the settlement are happy with the deal. Michael Taaffe, a lawyer who represents about 500 brokers who might be eligible to participate, said many of those clients are either contemplating or pursuing their own arbitration cases against Merrill.
“After many objections to certification of the class, Merrill Lynch/Bank of America is settling with the class in order to absolve itself of as much liability as possible, as cheaply as it can, at the expense of its former employees,” he said in a statement.
Lawyers for the plaintiffs said they may seek an award of as much as a quarter of the total settlement, according to a filing submitted by McCallum. Burnette and Chambers may be eligible for incentive payments of as much as $20,000, according to documents seeking approval of the settlement.
In his initial efforts to seek payment from Merrill, Chambers incurred more than $8,000 in legal fees, McCallum said in his filing.
Brokers alleged that under an agreement with Merrill they were entitled to payments if there was a change in control at the firm and they were either terminated without cause or left for what was defined as a “good reason.”
Thousands of brokers left Merrill after the 2009 acquisition for what they considered to be a “good reason,” according to the complaint. The settlement covers some of the brokers, according to attorneys at today’s hearing.
The case is Chambers v. Merrill Lynch & Co., 10-cv-07109, U.S. District Court, Southern District of New York (Manhattan).