Bank of America directors’ $20m settlement of investor lawsuits over the purchase of Merrill Lynch is inadequate given the billions of dollars of harm the deal caused, objectors to the accord said.
Bloomberg reports that the proposed settlement amounts to 4% of the board’s $500m of insurance coverage and less than 1% of the more than $2.4bn Bank of America officials agreed to pay in September to resolve other investors’ securities-fraud claims over the Merrill Lynch deal, lawyers for the shareholders said in federal court filings in New York Tuesday.
‘The grossly inadequate $20m value of the proposed settlement cannot be justified under any circumstances’, Paul Paradis, a New York-based lawyer for Bank of America investors who sued in Delaware claiming the bank overpaid for Merrill Lynch, said in the filing today. If the accord is approved, it could wipe out the Delaware claims.
A federal judge in Manhattan still must decide whether to approve Charlotte, North Carolina-based Bank of America’s $2.43bn settlement of shareholder suits that claimed management hid Merrill losses ahead of the 2009 deal. The accord is separate from the $20m settlement of so-called derivative claims against directors.
The shareholders claimed former Chief Executive Officer Kenneth D. Lewis and other board members misled them about the losses Merrill Lynch incurred before the $18.5bn buyout and should have pulled the plug on the deal.
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