A U.S. District Court judge has given final approval to the $150 million dollar settlement between Bank of America and the U.S. Securities and Exchange Commission over the bank's lack of disclosures in its acquisition of Merrill Lynch a year ago.
Judge Jed S. Rakoff said he was approving the agreement, though he called it far from ideal, referring to it as paltry and half-baked justice. Rakoff rejected a proposed $33 million settlement last year as inadequate.
In approving this settlement, Rakoff ordered the $150 million to be distributed to shareholders who lost money on their Bank of America stock when it plunged in the wake of the Merrill Lynch merger.
Though the judge was not initially satisfied with the settlement, the SEC pushed hard for it. Ohio Attorney General Richard Cordray said he also favored the deal.
We welcome Judge Rakoffs ruling, which recognizes that Bank of America failed to adequately disclose to its shareholders material information related to the Banks acquisition of Merrill Lynch. Todays decision validates and reinforces the core allegations of our lawsuit against Bank of America, said Cordray.
Last September, Cordray, in concert with five public pension funds, filed a shareholder class action lawsuit alleging securities violations based on many of the same alleged facts at issue in this enforcement action brought by the SEC. The suit filed by Cordray and other public pension funds is pending before a different judge in the U.S. District Court for the Southern District of New York.
Although the SEC did not, we sued not only Bank of America, but also top executives who we believe were personally engaged in violations of the securities laws, Cordray said. We will continue to aggressively pursue claims against Bank of America and other individual defendants on behalf of shareholders. We will not rest until Bank of America is held accountable for its wrongs, and until the rights of investors and retirees are vindicated.
The lead plaintiffs group for the class action suit filed in September includes the State Teachers Retirement System of Ohio, the Ohio Public Employees Retirement System, and three other public pension funds.
Merrill Lynch paid $3.6 billion in employee bonuses just days before Bank of America completed its purchase of the investment firm on January 1, 2009.
Soon after, Merrill Lynch reported losses of more than $15 billion for the fourth quarter of 2008.