BofA’s Merrill Japan Ordered to Pay Damages to Takefuji

Bank of America Corp.’s Japanese brokerage unit was ordered to pay 14.5 billion yen ($140 million) by the Tokyo High Court for its role in a bond transaction with failed consumer lender Takefuji Corp.

The court yesterday ordered Merrill Lynch Japan Securities Co. and an affiliate to pay compensation for losses stemming from the 2007 bond deal, overturning a district court judgment made last year, TFK, an entity responsible for repaying creditors following Takefuji’s 2010 bankruptcy, said in a statement on its website yesterday.

Merrill Lynch hasn’t decided whether it will appeal to the Supreme Court, said Tsukasa Noda, a Tokyo-based spokesman. The firm will examine the ruling and make a decision, he added. Charlotte, North Carolina-based Bank of America acquired Merrill Lynch in 2009.

Takefuji sued Merrill Lynch in 2010 for about 29 billion yen, arguing the brokerage failed to sufficiently explain the risks in the transaction designed to lower the consumer lender’s interest costs. The deal involved Takefuji investing 30 billion yen in a credit-linked security that was later liquidated as the securities backing it slumped.

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