Bank of America Agrees to Massive $2.3-Billion Class Action Settlement

The consequences of the financial crisis that began four years ago this month, with the collapse of Lehman Brothers, continue to take tangible form, most recently in Bank of America’s $2.3 billion settlement of claims related to its 2008 acquisition of Merrill Lynch. While not the largest federal securities settlement of all time, the Bank of America settlement falls within the top ten, among such dubious company as WorldCom and Enron (according to Stanford Law School Professor Joe Grundfest, who systematically follows and analyzes securities litigation under the auspices of Stanford’s Securities Class Action Clearinghouse). 

Within days of Bank America’s $50-billion acquisition of Merrill Lynch, leading voices in the financial press expressed their skepticism, with one characterizing it as “the deal from hell.”  However, in ill-advised public statements that would provide evidentiary fodder for the newly-settled litigation, Bank of America boasted that the synergy between it and Merrill Lynch would create a single dominant financial-services company. Instead, the hastily-constructed deal quickly proved to be disastrous, as many of Merrill Lynch’s top executives fled in the wake of revelations of huge, undisclosed losses.

Specific terms of the settlement — including how much individual shareholders and class counsel will receive — have not been released. However, this information will be included in the preliminary approval papers, likely to be filed presently.