Bank of America Corporation

Case Details

Class Period: September 13, 2008 - January 27, 2009
Date Filed: February 09, 2009
Case Number: 1:09-md-02058
Jurisdiction: Southern District of New York
icon-casetype Case Type: Derivative Shareholder Case

Case Summary

On February 9, 2009, Saxena White P.A. filed a shareholder derivative action on behalf of nominal Defendant Bank of America Corporation (“BAC”) against Defendants for their wrongful course of conduct arising from the Company’s acquisition of Merrill Lynch & Co. The Complaint alleged that, during the course of consummating the acquisition of Merrill Lynch, the Defendants breached their fiduciary duties and violated federal and state law by failing to protect the interests of the Company. Prior to the BAC shareholder vote on December 5, 2008 to approve the acquisition, the Defendants knew, or were severely reckless in not knowing, that Merrill Lynch had incurred billions of dollars in losses beyond what was publicly disclosed at the time that the Company entered into the merger agreement on September 15, 2008.

Beginning in January 2009, numerous putative securities fraud class actions were filed against BAC, Merrill Lynch, and certain officers and directors of both companies related to the merger. By order dated June 30, 2009, the Court consolidated the federal securities actions. On September 25, 2009, Lead Plaintiffs filed their consolidated amended complaint which alleged Defendants’ failed to disclose, prior to the shareholder vote approving the issuance of additional shares in connection with the merger: (1) Merrill Lynch’s billions of dollars in losses during the fourth quarter of 2008; (2) BAC’s agreement to allow Merrill Lynch to pay up to $5.8 billion in bonuses to its employees before the merger closed, notwithstanding those substantial losses; (3) the circumstances surrounding the negotiation of the merger (including the inadequacy of due diligence and pressure from federal regulators); (4) the purported benefits of the merger; and (5) BAC’s own deteriorating financial condition.

All Defendants moved to dismiss the First Amended Complaint, and on August 27, 2010, the Court issued an order that denied, in part, Defendants’ motions. On October 22, 2010, Lead Plaintiffs filed the Consolidated Second Amended Class Action Complaint.  The Second Amended Complaint added additional allegations concerning the scienter of Defendants for their failure to disclose Merrill’s 2008 fourth quarter losses. After full briefing on Defendants’ motions to dismiss the Second Amended Complaint, the Court sustained Lead Plaintiffs’ Section 10(b) claim against Defendants.

The parties immediately commenced full discovery after the Court’s July 29, 2011 decision on the motion to dismiss. On October 17, 2011, Lead Plaintiffs filed their motion for class certification. After a full round of briefing, the Court issued an order granting Lead Plaintiffs’ motion.

On February 21, 2012, Defendants filed with the United States Court of Appeals for the Second Circuit a petition to appeal the district court’s order granting class certification. After full briefing, on July 23, 2012, the Court of Appeals issued an order denying Defendants’ petition.

On December 4, 2012, the Court granted an order preliminarily approving the settlement.  At a hearing on January 11, 2013, after over three years of hotly contested litigation, the Court approved the settlement, comprised of $62,500,000 and certain corporate governance reforms.