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Bank of America agreed to pay $2.43 billion in a lawsuit related to its acquisition of Merrill Lynch.
Bank of America said on Friday that it agreed to pay $2.43 billion to settle a lawsuit related to its acquisition of Merrill Lynch.
According to the Associated Press, the lawsuit was filed on behalf of investors who owned stock in Bank of America when it decided to buy Merrill Lynch in 2008. Bank of America and its officers were accused of allegedly making false or misleading statements about both companies' financial status.
Bank of America denied the allegations, but said it had decided to settle to end the litigation. The settlement also included Bank of America agreeing to improve its corporate governance policies, according to The New York Times.
"Resolving this litigation removes uncertainty and risk and is in the best interests of our shareholders," said the bank's chief executive, Brian T. Moynihan, in a statement. "As we work to put these long-standing issues behind us, our primary focus is on the future and serving our customers and clients," he said, according to The Times.
Bloomberg noted that the bank will incur a $1.6 billion litigation expense in the third-quarter. "The firm may post a loss for the period after it said earnings also will be cut by $1.9 billion in pretax valuation adjustments related to credit spreads and a previously disclosed $800 million expense tied to UK taxes," said Bloomberg.
Bank of America's acquisition of Merrill Lynch was called into question after it revealed that Merrill would be posting losses of $27.6 billion, shortly after being bought in the fall of 2008. The acquisition added to Bank of America's financial troubles, leading the bank to ask for a $20 billion bailout on top of the $25 billion it had previously received, the AP reported.
It has since repaid all $45 billion.
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