A federal judge has dismissed a case in which shareholders had accused Bank of America of failing to disclose a potential lawsuit eventually brought by mortgage-securities investor American International Group.
U.S. District Judge John Koeltl in New York wrote in a decision Friday that the Charlotte-based bank had publicly disclosed the heightened litigation risks it faced because of its acquisitions of Countrywide Financial Corp. and Merrill Lynch. Koeltl also wrote that Bank of America was not obligated to disclose the imminence of the AIG lawsuit because the bank could not be certain about it.
The lawsuit was filed in September 2011, just a month after AIG sued the bank over $10 billion in losses it said it suffered on $28 billion invested in mortgage-backed securities. AIG said Bank of America, Countrywide and Merrill Lynch had misrepresented the quality of the mortgages. That lawsuit is pending.
In their lawsuit, the shareholders contended that Bank of America knew by at least January 2011 that AIG intended
to file a "massive" lawsuit against the bank. But the bank's 2010 annual report submitted to regulators in February 2011 failed to mention the possible AIG lawsuit, "the most significant and largest potential litigation that could be asserted against the company," the shareholders claimed.
On the day the lawsuit was filed, Bank of America shares fell 20 percent. It was also the first trading day since Standard & Poor's downgraded U.S. debt, causing the Dow Jones industrials to fall 634.76 points.
Koeltl wrote that Bank of America's 2010 report "explicitly discussed BoA’s escalating exposure" to mortgage-backed securities litigation. He added that newspapers were writing about AIG's potential lawsuits against lenders, including Bank of America.
"The particulars
of the potential AIG suit were known to the market and thus
allowed investors to evaluate the defendant’s statements," he wrote.
Bank of America spokesman Lawrence Grayson said Monday that the bank was pleased with the court's decision.
Monday, November 4, 2013
Bank of America wins dismissal of shareholders lawsuit
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2 comments:
I wonder how much they paid the judge to win this case.
From the very begining they lot upon such course of events billions of investment is nothing like
borrowing on the internet, for example, when you can fail to read the small print, but still it's not fatal.
Playing with big money is always risky especially when money is not yours, they knew quite well what they were doing.
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