New York Sues BofA and Merrill for Pension Losses
by DEALBOOK, dealbook.nytimes.comJuly 22nd 2010
The State of New York is suing Bank of America and its Merrill Lynch securities firm over the companies’ merger and Merrill’s subprime mortgage exposure, hoping to recover more money on its own than by joining existing class-action litigation, Reuters reports.
The state comptroller, Thomas P. DiNapoli, filed two lawsuits on Thursday in Federal District Court in Manhattan to recover losses suffered by the $132.5 billion New York State Common Retirement Fund, which he oversees.
More from Reuters:
Defendants include Bank of America’s former chief executive, Kenneth D. Lewis, and former chief financial officer, Joe Price, as well as Merrill’s former chief executive, Stanley O’Neal.
Mr. DiNapoli filed the lawsuits after choosing to “opt out” of 2007 shareholder litigation against Merrill and 2009 litigation against Bank of America, the largest bank by assets in the United States.
“Our attorneys believe this gives us a chance to get a better recovery,” perhaps reaching “tens of millions of dollars,” a spokesman for the comptroller, Robert Whalen, said in an interview.
The Common Fund owned 3.06 million Bank of America shares and 4.83 million Merrill shares, court records show.
Bill Halldin, a spokesman for Bank of America, declined to comment.
One complaint accuses Bank of America of misleading shareholders about Merrill’s losses as it prepared to buy the Wall Street firm in late 2008. The other accuses Merrill of misleading shareholders about its risk management and exposures to mortgage securities and collateralized debt obligations.
“These companies thought they could get away with profiting at the expense of New York’s pensioners and taxpayers through fraudulent activities and misleading public disclosures,” Mr. DiNapoli said in a statement. “They were mistaken.”
Bank of America agreed to buy Merrill on Sept. 15, 2008. Merrill lost $15.8 billion in the fourth quarter of that year, even as it paid out $3.6 billion of bonuses. The merger was completed on Jan. 1, 2009.
In February, Judge Jed Rakoff in Federal District Court in Manhattan accepted Bank of America’s $150 million settlement of civil charges by the Securities and Exchange Commission that it misled shareholders about the merger, an accord the judge called “half-baked justice at best.”
Attorney General Andrew M. Cuomo of New York has separately filed civil fraud charges against Bank of America, Mr. Lewis and Mr. Price.
Mr. DiNapoli is running for election as comptroller in November. Mr. Cuomo is running for governor. Both are Democrats.
Go to Article from Reuters via The New York Times »
Go to Press Release from Comptroller Thomas P. DiNapoli »
Original Page: http://dealbook.nytimes.com/2010/07/22/new-york-sues-bofa-and-merrill-for-pension-losses/
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