JURIST - Paper Chase: Federal judge approves $150 million SEC-Bank of America settlement fund

[JURIST] The US Securities and Exchange Commission (SEC) [official website] announced Wednesday that a judge in the US District Court for the Southern District of New York [official website] has approved a fund set up by Bank of America (BOA) [corporate website] in accordance with the settlement agreement [JURIST report] reached earlier this year. The SEC had charged [JURIST report] BOA with misleading investors regarding billions of dollars paid to Merrill Lynch [corporate website] executives during the acquisition of the firm. The fund will be used for payouts to shareholders [Reuters report] who owned BOA stock as of January 16, 2009. Eligible shareholders must submit their claims before November 12 to receive a payout from the fund. The district court twice rejected a proposed settlement [JURIST report] between the SEC and BOA for $33 million, which did not admit any fault or directly penalize any corporate executives, calling the settlement unfair to the shareholders.

The settlement agreement came less than a month after New York Attorney General Andrew Cuomo [JURIST news archive] filed civil charges [complaint; JURIST report] against BOA, former CEO Ken Lewis and former CFO Joseph Price, alleging that the bank misled investors in order to acquire Merrill Lynch. The complaint alleges that Merrill Lynch had significant losses in the months leading up to a shareholder vote on the merger and that Lewis and Price violated the New York Martin Act [WLF backgrounder, PDF] because they knew of the losses but failed to disclose them to shareholders before the vote. In June, BOA subsidiary Countrywide Home Loans, Inc. reached a $108 million settlement agreement [JURIST report] with the Federal Trade Commission (FTC) [official website] to resolve charges that the subsidiary collected excessive fees from homeowners facing foreclosure. The agreement allows the FTC to create a fund to provide refunds to borrowers affected by Countrywide's improper fees.