A district court judge issued his preliminary approval of a proposed $150 million settlement in the securities class action lawsuit against Merrill Lynch. The securities fraud lawsuit was filed for purchasers of specific Merrill Lynch preferred securities and bonds.
The plaintiffs of the Bond Action had invested in over $24 billion in preferred debt and securities that the broker-dealer had made available to the public between October 2006 and May 2008. The lead plaintiffs in the securities class action lawsuit were the Louisiana Municipal Police Employees’ Retirement System and the Louisiana Sheriffs’ Pension and Relief Fund. They pursued their claims under the Securities Acts’ Sections 11, 2, and 15.
In addition to Merrill Lynch, a number of the company’s officers and directors, as well as the offering underwriters, are named as defendants in the complaint.
The lawsuit claims that offering documents for certain securities offerings did not accurately reveal the “existence and the value of tens of billions of dollars of complex derivative securities linked to subprime mortgages” that were contained in Merrill’s balance sheet. Such exposures allegedly almost “wiped out” the broker dealer by September 2008 and nearly caused Bank of America, Merrill’s acquirer, to “topple.” A federal bailout helped rescue the merger.
The parties had previous agreed to a $475 million settlement, in addition to a $75 million settlement for a related class action per ERISA.
The defendants went into the settlement even though the motions to dismiss the amended complaint were pending. A November 23 hearing for granting final approval is now scheduled.
Related Web Resources:
BofA to settle Merrill lawsuit for $150 million, Reuters, August 24, 2009
Court Preliminarily Approves $150 Million Subprime-Related Merrill Lynch Bond Action Settlement, The D & O Diary, August 27, 2009
Louisiana Municipal Police Employees’ Retirement System