Securities class action on behalf of shareholders of Bank of America Corporation ("BoA") arising from materially misleading statements and omissions concerning BoA's acquisition (the "Acquisition") of Merrill Lynch & Co., Inc. ("Merrill"). The Class consists of all persons and entities who (i) purchased or otherwise acquired the common stock or certain preferred securities of BoA between September 15, 2008 and January 21, 2009, inclusive (the "Class Period"), excluding any shares of BoA common stock acquired by exchanging Merrill stock for BoA stock through the Acquisition; (ii) held BoA common stock or Series B Preferred Stock as of the record date of October 10, 2008 and were entitled to vote on the Acquisition; and (iii) purchased BoA common stock in a $10 billion secondary offering which occurred on or about October 7, 2008.
On July 1, 2009, the Honorable Denny Chin appointed the State Teachers Retirement System of Ohio, the Ohio Public Employees Retirement System, the Teacher Retirement System of Texas, Stichting Pensioenfonds Zorg en Welzijn, represented by PGGM Vermogensbeheer B.V., and Fjarde AP-Fonden as Co-Lead Plaintiffs in this action. The Court also appointed Bernstein Litowitz Berger & Grossmann LLP as Co-Lead Counsel for the Class. Upon Judge Chin's elevation to the Second Circuit Court of Appeals, this Action was assigned to the Honorable P. Kevin Castel.
On September 25, 2009, Co-Lead Plaintiffs filed their Consolidated Amended Class Action Complaint (the "Complaint"). The gravamen of the Complaint is that, throughout the Class Period, Defendants, including BoA CEO Kenneth D. Lewis, made a series of highly material false statements and omissions, including in the Proxy Statement mailed to shareholders in connection with the Acquisition, concerning tens of billions of dollars of losses which Merrill had suffered before the shareholder vote, and a secret agreement allowing Merrill to pay up to $5.8 billion in bonuses before the merger closed, despite these losses. Oblivious to these facts, BoA shareholders voted on December 5, 2008 to approve the Acquisition.
Following the shareholder vote, but before the Acquisition closed on January 1, 2009, Defendants continued to conceal numerous additional highly material facts from shareholders, including that (i) almost immediately after the shareholder vote, BoA decided it had grounds to terminate the merger because of the magnitude of Merrill's losses; (ii) senior federal regulators had threatened to terminate Defendant Lewis and BoA's Board unless they agreed to proceed with the merger, thus placing these Defendants under an irreconcilable conflict of interest; and (iii) in order to consummate the merger, Defendant Lewis asked for and received a highly-dilutive $138 billion taxpayer bailout to prevent BoA's own collapse.
The truth about Merrill's financial condition and its materially adverse impact on BoA was not revealed until mid-January 2009, when BoA announced that Merrill had suffered a loss of more than $21 billion during the fourth quarter of 2008 and, as a result, BoA had sought and accepted a $138 billion taxpayer bailout. On January 21, 2009, it was further reported that, despite Merrill's staggering losses, BoA had allowed Merrill to pay $3.6 billion in bonuses before the merger closed, ahead of Merrill's normal schedule, thus ensuring that Merrill's value and financial condition were depleted even further.
As these facts became known, the price of BoA common stock plummeted from $12.99 per share to a low of $5.10 per share, causing a market capitalization loss of approximately $50 billion.
On August 27, 2010 the Court issued an Order sustaining many of the claims in Co-Lead Plaintiffs' Consolidated Amended Class Action Complaint. While the Court determined that BoA's senior executives failed to disclose the highly material information of Merrill's losses to shareholders, it nevertheless dismissed certain of Co-Lead Plaintiffs' fraud claims on the grounds that the Amended Complaint failed to alleged that BoA and its executives had withheld this information recklessly. On September 25, 2010, Co-Lead Plaintiffs filed a Second Amended Class Action Complaint (the "SAC"). On July 29, 2011, the Court issued an Order sustaining the vast majority of Lead Plaintiffs' claims. Discovery is now ongoing.
On October 17, 2011, Lead Plaintiffs filed a motion to certify a Class of Bank of America investors. Defendants have opposed the motion and it is now pending before the Court.
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