In their suit, the shareholders claimed that the bank overpaid for the failed investment company and that it misrepresented the true extent of Merrill Lynch’s financial problems. The shareholders also alleged that Merrill Lynch paid its employees $3.6 billion in bonuses, even as the company failed.
While terms of the settlement were not disclosed, prior filings with the court suggest the bank will pay the shareholders about $20 million, the International Business Times reported.
Kenneth Lewis, the former CEO of Bank of America, who oversaw the merger, was named as defendant in the suit. The acquisition of Merrill Lynch, proposed by the federal government during the height of the financial crisis, later proved a financial debacle for Bank of America, which needed a second financial infusion from the government.
The settlement agreement must be filed with the U.S. District Court judge in charge of the case, The judge has indicated that he may not approve the settlement until after a separate, and much larger, class-action lawsuit brought by other shareholders against the bank goes to trial. That suit will resolve certain outstanding legal questions over the bank’s liability.
Bank of America shares slipped fractionally in pre-market trading on Thursday.