Bank of America (BofA) said that it, and certain of its current and former officers and directors, have agreed to settle a class action lawsuit brought in 2009 on behalf of investors who purchased or held BofA securities at the time the company announced plans to acquire Merrill Lynch.
Under the terms of the proposed settlement, which is subject to court approval, BofA would pay a total of US$2.43bn and institute certain corporate governance policies. Plaintiffs had alleged, among other claims, that the bank and certain of its officers made false or misleading statements about the financial health of BofA and Merrill. BofA denies the allegations and said it is entering into the settlement to eliminate the uncertainties, burden and expense of further protracted litigation.
“Resolving this litigation removes uncertainty and risk and is in the best interests of our shareholders,” said BofA chief executive officer (CEO) Brian Moynihan. “As we work to put these long-standing issues behind us, our primary focus is on the future and serving our customers and clients.”
The amount to be paid under the proposed settlement will be covered by a combination of BofA’s existing litigation reserves and incremental litigation expense to be recorded in Q312. The company estimates total litigation expense will be approximately US$1.6bn for the three months ended 30 September 2012, which includes the incremental costs of the related settlement above previous accruals and other litigation-related items.
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