The U.S. District Court for the Southern District of New York has preliminarily approved a settlement of a lawsuit brought by Pennsylvania Public School Employees’ Retirement System against Bank of America over the bank’s mortgage-backed securities program.
The lawsuit, originally filed in 2011, claims the defendant violated federal securities law by allegedly misrepresenting and concealing the magnitude of the bank’s potential exposure to demands to repurchase mortgage-backed securities that had been sold by Bank of America and Countrywide Financial Corporation, and about alleged risks to the bank arising from its use of and reliance on a national database that tracks changes in mortgage servicing rights and beneficial ownership interest in loans secured by residential real estate. The lawsuit claims the misrepresentations caused Bank of America stock to trade at artificially inflated prices.
The bank has agreed to settle all claims for a cash payment of $335 million. It denies any wrongdoing and, according to a court document, it agreed to the settlement to eliminate the burden and expense of further litigation.
The notice of the settlement agreement can be found in this document.