ZEIST, Netherlands, Sept. 28, 2012 /PRNewswire/ -- Defendant Bank of America Corporation ("BAC") has agreed to pay $2.425 billion in cash and to implement significant corporate governance improvements to resolve a federal securities class-action lawsuit arising out of its acquisition of Merrill Lynch & Co., Inc. ("Merrill Lynch"), announced on September 15, 2008 and completed on January 1, 2009. The Action, In re Bank of America Corp. Securities, Derivative, and Employee Retirement Income Security Act (ERISA) Litigation, Master File No. MDL 2058, is currently pending in the United States District Court for the Southern District of New York before Judge P. Kevin Castel.
The Class Representatives previously certified by the Court in the Action are Stichting Pensioenfonds Zorg en Welzijn, represented by PGGM Vermogensbeheer B.V. (PGGM Investments), Fjarde AP-Fonden, the State Teachers Retirement System of Ohio, the Ohio Public Employees Retirement System, and the Teacher Retirement System of Texas (collectively the "Lead Plaintiffs"). Lead Plaintiffs alleged that BAC, Merrill Lynch, and certain current and/or former officers and directors of BAC or Merrill Lynch violated the federal securities laws by making a series of materially false statements and omissions in connection with the Merrill Lynch acquisition regarding billions of dollars of losses which Merrill had suffered before the shareholder vote, and an undisclosed agreement allowing Merrill to pay up to $5.8 billion in bonuses before the acquisition closed, despite these losses. Not privy to these material facts, BAC shareholders voted on December 5, 2008 to approve the acquisition. BAC's stock price plunged when the true facts were revealed in a series of disclosures in January of 2009.
The Settlement was reached after almost four years of intense, hard-fought litigation with a trial set to begin on October 22, 2012. The Settlement covers the Class previously certified by the Court on February 6, 2012. The settlement discussions were conducted under the auspices of former United States District Judge Layn R. Phillips.
The Settlement is, by a wide margin, the single largest securities class action settlement ever resolving a Section 14(a) claim – the federal securities provision designed to protect investors against misstatements in connection with a proxy solicitation. In addition, the settlement is one of the four largest settlement amounts ever funded by a single corporate defendant for violations of the federal securities laws in history, and the single largest settlement in which there was no financial restatement or criminal convictions related to the alleged misconduct.
As part of the settlement, BAC's Board of Directors also agreed to significant changes to the Company's corporate governance structure. These include:
- BoA must enact or amend their corporate governance procedures to include the following at least thru 1/1/15:
- The settlement requires the Board to provide detailed disclosures to shareholders if the Board determines not to accept the resignation of a director who fails to receive a majority of shareholder votes and prohibits a director who has not received a majority vote from standing for election at the next shareholder meeting.
- The settlement requires BoA to disclose to shareholders any directors who fail to comply with the minimum stock ownership policy.
- The settlement requires BoA's Corporate Development Committee to inform the CEO and Board of any bonus or incentive compensation agreements that are material to the overall deal price in a merger and requires the Board to approve such agreements.
- The settlement extends through January 2015 all of the provisions required by the SEC settlement entered into in 2010 which would expire in March 2013.
"We believe the Settlement represents a landmark recovery for BAC shareholders who voted on the acquisition without complete and accurate information," said Eloy Lindeijer, Chief Investment Management of PGGM Investments in the Netherlands. "The settlement sends a strong message to all companies concerning the paramount importance of conducting a fully-informed shareholder vote on corporate acquisitions and mergers."
The settlement, if approved, is to be paid on top of the $150 million recovered by the SEC from BAC for the same misconduct which has already been distributed, and demonstrates the continuing need for private litigation to supplement government enforcement actions.
Lead Plaintiffs were represented in the Action by co-lead counsel Bernstein Litowitz Berger & Grossmann LLP; Kaplan Fox & Kilsheimer LLP; and Kessler Topaz Meltzer & Check, LLP.
PGGM is a leading Dutch pension fund service provider offering pension management, integrated asset management, management support and policy advice to its institutional clients. PGGM currently works on behalf of six pension funds, managing about €125 billion of pension assets of 2.5 million people. As a cooperative organisation, PGGM helps its over 570,000 members to secure a valuable future. PGGM works independently or with strategic partners to develop innovative future benefit solutions combining pensions, care, accommodation and employment.
Pensioenfonds Zorg en Welzijn
PFZW is responsible for the pension policy and pension assets of 2.5 million current and former employees in the Dutch care and welfare sector. The pension fund is the owner of the pension assets, which amounted to €118.6 billion as at the end of June, 2012. The fund is governed by representatives of employee and employer organisations. The Board of Trustees is accountable to the Pension Council, which consists of fund members, pensioners and employers. The Pension Council is also the co-determination body and issues recommendations on proposed decisions. PFZW has outsourced the administration of the pension scheme and the management of the pension assets to PGGM.
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