US - Five pension funds have filed an amended complaint against Bank of America (BofA) alleging the firm mislead investors in the lead-up to the bank's acquisition of Merrill Lynch.
The complaint alleges that BofA agreed to allow Merrill to dole out some $5.8bn in bonuses, but declined to tell shareholders of the deal. It also claims senior executives at both firms also failed to inform shareholders Merrill was poised to suffer billions in losses.
The five pension funds leading the class action are: State Teachers Retirement System of Ohio; the Ohio Public Employees Retirement System; the Teacher Retirement System of Texas; Stichting Pensioenfonds Zorg en Welzijn, represented by PGGM Vermogensbeheer B.V.; and Fjärde AP-Fonden. (Global Pensions, July 3, 2009)
Ohio Attorney General Richard Cordray said: "They were concealing billions of dollars in losses with one hand and clearing the way for extravagant bonus payments with the other. This case gives the public pension funds and other shareholders a chance to stand up against Wall Street."
BofA paid US$50.3bn for Merrill in a deal that closed in January of this year. BofA shareholders approved the deal in December, but in the fourth quarter of 2008 alone, Merrill posted losses of more than $15bn, leading the US Treasury to inject $20bn.
Spokesman for the attorney general Ted Hart said the pension funds were seeking an "unspecified" amount in damages.
Officials at BofA could not be reached for comment.
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