View this article online: https://www.claimsjournal.com/news/national/2009/07/02/101922.htm
A group of five public pension funds, including state funds in Ohio and Texas, have won the right to lead investor class-action lawsuits against Bank of America Corp over its acquisition of Merrill Lynch & Co.
U.S. District Judge Denny Chin granted lead plaintiff status Tuesday to funds including the State Teachers Retirement System of Ohio, the Ohio Public Employees Retirement System and the Teachers Retirement System of Texas.
Investors are accusing Bank of America of misleading them about the state of Merrill’s health ahead of the Jan. 1 closing, even as it was becoming clear Merrill was on its way to what would be a $15.84 billion fourth-quarter loss.
A lead plaintiff in a securities class-action lawsuit helps direct the litigation and is typically a large shareholder who represents the other shareholder plaintiffs.
“Our public pension funds have been given both a great opportunity and a great responsibility,” Ohio Attorney General Richard Cordray said. “We now will work to hold Wall Street accountable and to protect the rights of Bank of America investors.”
Bank of America spokeswoman Shirley Norton declined to comment.
Bank of America shares have fallen 61 percent since the merger was announced last Sept. 15.
The merger has prompted Congressional hearings into why the Charlotte, North Carolina-based bank failed to back out of the merger or disclose more about Merrill’s health and the extent to which federal regulators pushed the bank to close.
The winning fund group beat out two the three largest U.S. public pension funds, the California Public Employees’ Retirement System and the California State Teachers’ Retirement System, for lead plaintiff status.
Others who sought to lead the case included the Central States, Southeast and Southwest Areas Pension Fund and the West Virginia Investment Management Board.
Bank of America has received $45 billion of federal bailout money and recently sold stock and assets to build a $33.9 billion buffer required by regulators who conducted a “stress test” of the bank’s ability to weather a prolonged recession.
Bank of America shares closed down 15 cents at $13.05 Wednesday on the New York Stock Exchange.
The case is Sklar v. Bank of America Corp, U.S. District Court for the Southern District of New York (Manhattan), No. 09-00580. (Reporting by Elinor Comlay and Jonathan Stempel; Editing by Richard Chang and Andre Grenon)