BofA Investor Suit Granted Class Action Status
Bank of America Corp. investors won permission to proceed as a class action in their lawsuit claiming the company misled shareholders about the acquisition of Merrill Lynch & Co.
U.S. District Judge Kevin Castel in Manhattan ruled yesterday that the claims in the case may go forward on behalf of all investors who held Bank of America common stock and call options from Sept. 18, 2008, to Jan. 21, 2009. Castel also certified a class of investors who held common stock on Oct. 10, 2008, and were entitled to vote on the Merrill acquisition.
“Given the potential class size and the likelihood that individual recovery for some class members may be relatively modest, class certification is appropriate,” Castel wrote.
The suit, filed in 2009, claims Bank of America failed to disclose information about bonuses to Merrill employees and about the firm’s financial losses in the fourth quarter of 2008. The decision to grant class status allows investors to pool resources and gives their lawyers more leverage to push for a settlement with the bank.
Lawrence Grayson, a Bank of America spokesman, declined to comment on the ruling.
In July, Castel dismissed claims against Kenneth Lewis, the bank’s former chief executive officer, over Bank of America’s disclosure of federal financial assistance and over the shareholders’ right to sue over certain types of securities.
Congress held hearings in 2009 questioning bonuses paid to employees of Merrill, the brokerage acquired by the bank that year, even as the firm’s losses triggered a federal bailout for Charlotte, North Carolina-based Bank of America.
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