Does this have any chance of succeeding?
A federal judge yesterday allowed Ohio pension systems to proceed with their legal claims that Bank of America paid billions of dollars in bonuses to executives of a firm it was absorbing without informing shareholders, Ohio Attorney General Richard Cordray said.
U.S. District Judge P. Kevin Castel denied motions by Bank of America and Merrill Lynch, which the banking giant acquired in September 2008 amid the financial crisis, to dismiss the state’s lawsuit against the companies and their executives.
Ohio’s pension funds claim that the companies committed securities fraud and issued false proxy statements by issuing $5.8 billion in accelerated year-end bonuses to executives and employees and failed to disclose that information to shareholders before they agreed to allow the companies to merge.
Specifically, the court indicated that the following claims could proceed:
Securities fraud claims against Bank of America, Merrill Lynch and their respective CEOs, Ken Lewis and John Thain, for alleged misstatements related to the failure to disclose the agreement to pay up to $5.8 billion in discretionary bonuses, and against Ken Lewis and Bank of America for alleged omissions related to the bonus arrangement.
False proxy statement claims against Ken Lewis, John Thain, Bank of America, Merrill Lynch and certain Bank of America directors about the bonus arrangement.
False proxy statement claims against all defendants arising out of their failure to disclose Merrill’s fourth quarter 2008 losses.
Liability claims against certain officers and directors for issues under their control.
Claims relating to false offering statements that misstated or omitted Merrill’s bonus payments.
The district court dismissed certain securities fraud claims, including claims relating to the failure to disclose Merrill Lynch’s fourth quarter 2008 losses.
Cordray said he was very pleased with the ruling and that the language upholding the false proxy statement claims is particularly helpful. “In the order, Judge Castel held that liability under the false proxy statement claims in this case could be imposed if negligence is shown. He squarely rejected the defendants’ position that the lead plaintiffs must make a more stringent showing of ‘scienter’– knowing or reckless intent to deceive or defraud. We are looking forward to developing evidence against the defendants under this negligence standard,” Cordray stated.
*Thanks so much to Ann Laurie for helping me with Word Press.