A $2.4 billion class action lawsuit has been settled against one of the nation’s largest banks in favor of investors who lost billions…including two of the state’s largest pension systems. Ohio Public Radio’s Jo Ingles has details on what is being hailed as an historic settlement.
Ohio Attorney General Mike DeWine says this class action lawsuit settlement sets a record.
DeWine – The settlement we are announcing this morning is the single largest securities class action settlement ever.
DeWine estimates the two point four billion dollar national settlement with Bank of America will allow the State Teachers Retirement System and the Ohio Public Employees Retirement system to receive a total of 20 million dollars, depending on the number of claims filed by investors who lost millions in 2009. DeWine says that’s when Bank of America and Merrill Lynch made materially false statements and obmissions in connection with the Merrill Lynch acquisition.
DeWine – There was a general reference to losses but never was the magnitude of those losses disclosed. This would be akin to telling someone to watch out for a pothole when they were about to fall into the Grand Canyon.
DeWine says the amount of the settlement is high enough to serve as a deterrent for other companies to hide basic information from investors in the future.
DeWine – This is outrageous behavior and they have paid a price for it. What we hope for in the future is that companies do not do that…that they are very open as most companies are. And that they follow what the law requires them to do and that is, once they have the information, they are required that to shareholders. They had the opportunity to supplement the information they had put out before, they had the opportunity to go public with this to their shareholders. They had the information and they simply failed to do it. They hid it.
DeWine says it’s unclear exactly how much the state’s pension funds lost in the bad investments with Bank of America though he admits this settlement might not make them whole. But DeWine says it was still the smart thing to do.
DeWine – We had some very good lawyers working on this, supplemented by some good lawyers from our office. WE have spent a lot of time on this. There is risk in any trial. This trial was sent to go forward in October. We do calculations. Each side looks at it and calculates their risk and so that was done as we expect it to be done by good lawyers in the case. So I’m very happy with the settlement and happy with the size of it. I think the pension systems in Ohio and the people who belong to those pension systems should be very happy with the results that have been achieved.
DeWine says the settlement will be shared with pension systems in Texas, Sweden and the Netherlands.