Bank of America will pay Merrill Lynch a settlement of $2.4 billion, AP reports.
The settlement has to do with Bank of America’s acquisition of Merrill Lynch in 2008.
The deal was a major part of what made Bank of America from a North Carolina based bank to a Wall Street contender, but it’s been riddled with controversy.
The $2.43 billion controversy at hand is a lawsuit that shareholders brough against Bank of America. They said that the bank’s board witheld information about big losses in Merrill Lynch’s balance sheets before the acquisition.
In short, they’d been mislead about the health of the bank they were buying.
It’s not hard to see why BofA would want Merrill — they got a lot out of the deal. Here’s what they said about in their post acquisition 10-K:
With the acquisition of Merrill Lynch & Co., Inc. (Merrill Lynch) on January 1, 2009, we have one of the largest wealth management businesses in the world with more than 18,000 financial advisors and more than $1.8 trillion in client assets, and we are a global leader in corporate and investment banking and trading across a broad range of asset classes serving corporations, governments, institutions and individuals around the world. In addition, through our ownership of Merrill Lynch, we have an approximately 50 per cent economic ownership in BlackRock, Inc., a publicly traded investment management company. With the acquisition of Merrill Lynch, we currently operate in all 50 states, the District of Columbia and more than 40 foreign countries. As of December 31, 2008, the Bank of America retail banking footprint covers more than 82 per cent of the U.S. population and 44 per cent of the country’s wealthy households, and in the United States, we serve approximately 59 million consumer and small business relationships with more than 6,100 banking centres, approximately 18,700 ATMs, nationwide call centres, and leading online and mobile banking platforms. We have banking centres in 13 of the 15 fastest growing states and have leadership positions in 10 of those states. We offer industry-leading support to more than 4 million small business owners.
Bank of America still denies any wrongdoing in the case, but say they are paying the settlement to put the litigation behind them. They also have to ennact new corporate governance rules.
“Resolving this litigation removes uncertainty and risk and is in the best interests of our shareholders,” said Brian Moynihan chief executive said in a statement. “As we work to put these long-standing issues behind us, our primary focus is on the future and serving our customers and clients.”
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