BofA's Merrill Wins Takefuji Case on Appeal to Japan's Top Court

  • U.S. firm doesn't need to pay 14.5 billion yen in compensation
  • Final court decision on Merrill's role in Takefuji bond deal

Bank of America Corp.’s Merrill Lynch units won a case on appeal to Japan’s highest court against a ruling that they must pay damages to failed consumer lender Takefuji Corp. for their role in a bond transaction.

The Supreme Court of Japan overturned the high court decision that Merrill Lynch International and Merrill Lynch Japan Securities Co. must pay 14.5 billion yen ($128 million) in compensation to Takefuji. The Tokyo High Court made the ruling in August 2014, overturning a district court judgment made in 2013.

Takefuji sued Merrill Lynch in April 2010 for about 29 billion yen, arguing the brokerage failed to sufficiently explain the risks in the transaction, which was 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.

Charlotte, North Carolina-based Bank of America acquired Merrill Lynch in 2009. Takefuji went bankrupt in September 2010.

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