BAC Stock Losses?
Class Action Filed against Bank of America over its Disastrous Acquistion of Merrill Lynch
Did you invest in BAC? We are seeking investors in BAC who lost money. Owners of Bank of America BAC voting shares in 2008 may have legal claims for losses.
On September 15, 2008, Bank of America announced an agreement to acquire Merrill Lynch & Co in a stock-for-stock deal valued at $29 billion. To obtain shareholder approval for the deal, BofA and its senior officers and directors described Merrill as “the crown jewel of the company” and pronounced that “together our companies are more valuable.” On November 3, 2008, the companies issued a final joint proxy statement urging their respective shareholders to vote their shares in favor of the deal.
On December 5, 2008, holders of 82% of BofA shares voted in favor. The merger became effective January 1, 2009. Not disclosed to shareholders until after the vote, however, was a dirty secret: Merrill was hemorrhaging money and would report a record quarterly loss that almost equaled the value of the deal. Worse, BofA and Merrill secretly agreed to pay $5.8 billion in bonuses to Merrill executives prior to the end of the year.
When BofA disclosed these details, the share price of BofA plummeted from more than $12 per share to approximately $5 per share in less than a week, in what the New York Times called one of the greatest destructions of shareholder wealth in history.
A class action lawsuit is pending in federal court seeking financial recovery for some shareholders. According to the class complaint:
• BofA and its senior officers and directors knew but failed to disclose that, in the fourth quarter of 2008, Merrill was virtually on the brink of insolvency as it continued to hemorrhage significant sums of cash as a result of its bad investments. By December 1, 2008, just five days before the BofA shareholder vote, BofA knew that Merrill had incurred pretax losses of a staggering $13.3 billion for the 2008 fourth quarter, and still climbing. These losses were so significant that BofA’s senior officers and directors debated whether to invoke a contractual provision that would allow BofA to back out of the merger with Merrill because of the “material adverse change” to Merrill’s condition. None of these developments were disclosed to shareholders. As it turned out, Merrill had a quarterly pre-tax loss of $21 billion (or more than $15 billion after tax) – almost the value of the entire $29 billion merger.
• BofA and its senior officers and directors knew but failed to disclose that, under a secret provision agreed to with Merrill’s senior executives, BofA agreed that Merrill could pay its executives up to $5.8 billion in bonuses before January 1, 2009, contrary to past practices.
• BofA and its senior officers and directors knew but failed to disclose that the Merrill deal was so fraught with risk that BofA had sought and received $20 billion of bailout funds from the United States government to assist in closing the merger deal with Merrill, and had arranged for further government protection against losses on $118 billion of Merrill’s most toxic assets.
As a BofA Shareholder, Are Your Interests Being Adequately Protected?
Together with some of the nation’s leading securities litigation firms, Kyros Law is investigating and pursuing claims on behalf of BofA shareholders. If you held BofA voting shares on October, 10, 2008 (the record date for voting on the deal) and were entitled to vote in the December 5, 2011 shareholder vote, your interests may be better protected by filing your own individual claim.
For a free consultation with a lawyer and to discuss your options, please call Attorney Bill Kyros at 1-800-934-2921 to discuss your rights.
Kyros Law is a Boston-based law firm with significant experience representing investors in Arbitration recovery, shareholder class actions, shareholder derivative actions, and securities fraud class actions. For info about our law firm please our Kyros Law web site.
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