PhotoBank of America has settled a long-simmering lawsuit focusing on its 2008 acquisition of Merrill Lynch, closing another chapter in the infamous financial collapse that rocked the nation that year.

According to the suit, when Bank of America announced on September 14, 2008 that it planned to buy Merrill Lynch, it failed to disclose the dire financial situation at Merrill Lynch, which would end up suffering over $27 billion in losses that year. Ultimately, Bank of America -- which had already been awarded $25 billion of bailout money -- requested another $20 billion.

According to the Securities and Exchange Commission (SEC), Bank of America gave Merrill Lynch permission to pay out bonuses totaling as much as $5.8 billion before Bank of America shareholders voted on whether to acquire the ailing bank.

Dramatic period

The planned sale was announced during one of the most dramatic weekends of the prolonged financial crisis, with banking giant Lehman Brothers declaring bankruptcy the very next day. The acquisition was finalized on January 1, 2009.

Bank of America  April 11, 2013, 2:06 a.m.
Consumers rate Bank of America
According to a Wall Street Journal reportat the time, Bank of America gave up 0.8595 shares of its own stock for every Merrill Lynch common share, representing around $29 for each share.

In an opinion, Judge Kevin Castel of the U.S. District Court for the Southern District of Manhattan said that the settlement was "fair, reasonable and adequate," and followed a case that was "hard fought." The judge's approval formalized the settlement, which was initially proposed by Bank of America in September of last year.

In a statement in September, Bank of America maintained that it was not liable. CEO Brian Moynihan said that the settlement "removes uncertainty and risk and is in the best interests of our shareholders," and on Friday Moynihan said that his company's "primary focus is on the future."

The $2.4 billion agreement holds the distinction of being the largest settlement of a securities class-action growing out of the 2008 financial collapse.

The case is one of several growing out of what the Wall Street Journal in 2009 called the "$50 Billion Deal From Hell." New York Attorney General Eric Schneiderman is pursuing another case focused on the acquisition.

 

Share your Comments