Arab Today, arab today judge approves 243bn bank of america settlement
Last Updated : GMT 02:54:58
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Judge approves $2.43bn Bank of America settlement

Arab Today, arab today

Arab Today, arab today Judge approves $2.43bn Bank of America settlement

New York - UPI

A federal judge in New York approved a $2.43 billion settlement to end claims Bank of America misled shareholders when it purchased Merrill Lynch & Co. Bank of America closed on the purchase of Merrill Lynch in January 2009, having announced it had reached a deal to buy the financial giant in September 2008, one day before Lehman Brothers announced it was bankrupt. Shareholders approved of the deal but later sued, claiming the bank\'s executives misled them by not revealing the extent of financial problems at Merrill Lynch. At the time, Bank of America Chief Executive Officer Kenneth Lewis called the acquisition of Merrill Lynch, \"the deal of a lifetime.\" The company\'s market value did not reflect that sentiment. BofA shares lost more than half their value from the time the agreement to buy Merrill Lynch was announced to the time it was finalized, cutting BofA\'s value by $70 billion. Similarly, the Merrill Lynch deal was valued at $50 billion in September, when announced. By the time the deal closed, it was worth about $19 billio. BofA did not admit any wrongdoing, but said it settled the matter to avoid prolonged litigation, The Wall Street Journal reported Saturday. U.S. District Judge Kevin Castel said the settlement was \"fair, reasonable and adequate,\" and Max Berger, a lawyer for the lead plaintiffs in the lawsuit, said the settlement was \"historic.\" It is the largest settlement for shareholders to come out of the 2008 financial crisis, the Journal said. BofA was struggling on other fronts, as well. Primarily, it was the height of the 2008 financial crisis that originated in the United States and became so severe that a nearly global economic downturn ensued. Very few financial firms, if any, were unscathed by the debacle. Secondly, Bank of America purchased West Coast mortgage lender Countrywide Financial earlier in 2008. With the financial crisis sparked by a downturn in the subprime mortgage market, and with California being one of the regions most affected by the market collapse, the purchase of Countrywide could hardly have been timed more poorly.

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