Bank of America Settles for $4.25M New York Securities Fraud Allegations that Merrill Lynch & Co. Inc. Hid Subprime Mortgage Risks from Investors
Bank of America Corp. (BAC) and the New York State Common Retirement Fund have settled the latter’s securities fraud lawsuit accusing Merrill Lynch & Co. Inc. of concealing the risks involved in investing in the subprime mortgage market. Under the terms of the settlement, Bank of America, which owns Merrill Lynch, will pay $4.25 million.
The comptroller’s office is keeping the terms of the securities settlement confidential. State Comptroller Thomas P. DiNapoli did announce last July that the New York pension fund wanted to recover losses sustained by investors from Merrill’s alleged “fraud and deception” that “artificially inflated” the value of Merrill stock, which rapidly declined when the extent of exposure was revealed.
By opting out of a similar class action complaint involving other funds, the state pension fund has a chance of recovering more from the investment bank. Another securities lawsuit that has yet to be resolved seeks to recover losses related to Bank of America’s proxy disclosure when acquiring Merrill.
The demise of the subprime mortgage market a few years ago contributed to the crisis in the housing market and the economic collapse that has affected millions in the US and the rest of the world. Investors have since stepped forward and filed securities claims and lawsuits against investment banks, brokers, and others in the financial industry for misrepresenting the risks involved with subprime mortgages that have resulted in losses in the billions.
DiNapoli, BOA/Merrill Lynch settle for $4.25 million, Capitol Confidential, January 13, 2011
The Subprime Mortgage Market Collapse: A Primer on the Causes and Possible Solutions, The Heritage Foundation
NY comptroller settles Merrill Lynch fraud suit, BusinessWeek, January 13, 2011
New York State Common Retirement Fund
Our stockbroker fraud law firm has been aggressively working to help many investors recoup their losses from the subprime mortgage market debacle. Contact Shepherd Smith Edwards & Kantas LTD LLP today.