Consolidated Securities Class Action Complaint Filed Against BofA Over Merrill Merger Disclosures

The American Lawyer; September 29, 2009

Even though the rejected Securities and Exchange Commission settlement with Bank of America for alleged disclosure deficiencies in BofA’s merger with Merrill Lynch has been getting all the attention, the securities class action against the company that’s pending in New York federal district court could end up being more important — at least in terms of BofA’s liability.

On Monday, the lead plaintiffs in the case — an ad hoc group of public pension funds from Texas, Ohio, the Netherlands and Sweden — filed their consolidated class action complaint against BofA, certain directors and officers (including Kenneth Lewis), and former Merrill CEO John Thain. The highly detailed 155-page complaint (pdf) is available at the Web site for the Ohio attorney general.

In the suit, filed by lawyers at Bernstein Litowtiz Berger & Grossmann; Kaplan Fox & Kilsheimer; and Barroway Topaz Kessler Meltzer & Check, the plaintiffs claim that BofA made false and misleading statements about Merrill’s financial condition before shareholders could vote on the merger. It also alleges that BofA made a material omission when it did not disclose to shareholders that the merger agreement allowed Merrill to pay up to $5.8 billion in bonuses to its executives and employees. All told, the plaintiffs claim that BofA’s stock fell 56 percent in January as a result of the belated disclosures, which destroyed “tens of billions of dollars in shareholder value.”