Judge OKs $2.4B Bank of America settlement over Merrill Lynch deal

A federal judge in New York on Friday approved a $2.42 billion cash deal to settle shareholder claims that Bank of America misled investors about its purchase of Merrill Lynch.

The settlement was announced in September but needed court approval. Judge Kevin Castel, of the Southern District of New York, has signed off on the settlement, paving the way for shareholders to receive compensation. The task before Castel on Friday: to determine whether the settlement was fair.

“We’re pleased that this matter has been resolved,” Lawrence Grayson, spokesman for Bank of America, said Friday.

The settlement was reached after shareholders said they had not been given information on Merrill’s deteriorating financial health before they voted Dec. 5, 2008, to approve the $50 billion purchase of the company.

Bank of America has denied the investors’ allegations.

Teachers retirement systems in Ohio and Texas, the Ohio Public Employees Retirement System and a pension fund in the Netherlands are among the plaintiffs.

The settlement applies to those who owned Bank of America common shares as of Oct. 10, 2008, and had the right to vote on the Merrill deal and those who acquired common shares from Sept. 18, 2008, through Jan. 21, 2009. Some other stockholders also are affected.

April 25 is the deadline for affected investors to file a claim.

For settlement documents and court filings on the case, click here.