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The second-largest U.S. bank disclosed the accord in its
quarterly report filed on Friday with the U.S. Securities and
Exchange Commission. It said it set aside enough reserves for
the settlement as of June 30, and that final documentation and
court approval are still needed.
Shareholders led by the Pennsylvania Public School Employees'
Retirement System claimed they had been misled into buying Bank
of America stock in 2009 and 2010, including stock sold to repay
$45 billion of federal bailout money.
They said the Charlotte, North Carolina-based lender knew it
could not raise enough capital had it revealed it might have to
buy back billions of dollars of securities backed by risky
loans, including from the former Countrywide Financial Corp.
Shareholders also said the bank knew that record keeping in
Merscorp Inc's private Mortgage Electronic Registration Systems
registry was so poor that it would not be able to legally
foreclose on thousands of delinquent mortgages.
MERS was established in 1995 to circumvent the often cumbersome
process of transferring ownership of mortgages and recording
changes with county clerks.
Spokesmen for Bank of America did not immediately respond to
requests for comment. The pension fund and its in-house counsel
did not immediately respond to similar requests. An outside
lawyer for the fund declined to comment.
The bank has spent more than $70 billion since the financial
crisis to resolve legal and regulatory matters, including those
tied to its purchases of Countrywide in July 2008 and Merrill
Lynch & Co six months later.
The case is Pennsylvania Public School Employees' Retirement
System et al v. Bank of America Corp et al, U.S. District Court,
Southern District of New York, No. 11-00733.
(Reporting by Jonathan Stempel in New York; Editing by Tom
Brown)
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