DiNapoli said he filed the suits on behalf of the $132-billion New York State Common Fund (CRF) to recoup losses from the fund’s holdings in the two companies. A Reuters report said the CRF owned 3.06 million Bank of America shares and 4.83 million Merrill shares.
“These companies thought they could get away with profiting at the expense of New York’s pensioners and taxpayers through fraudulent activities and misleading public disclosures, and they were mistaken,” DiNapoli declared, in the news release. “Today, these companies have been served notice that they will be held accountable for losses caused through their misconduct. Investors, like the Fund, can tolerate risk – it’s what we do – but we cannot tolerate this kind of corporate irresponsibility.”
DiNapoli spokesman Robert Whelan told Reuters that the CRF had gotten legal advice that it would be better off to pursue its own legal remedies rather than join in 2007 Merrill shareholder litigation and 2009 BofA litigation. “Our attorneys believe this gives us a chance to get a better recovery,” perhaps reaching “tens of millions of dollars,” Whelan told Reuters.
Bank of America agreed to buy Merrill on September 15, 2008. Merrill lost $15.8 billion in the fourth quarter of that year. The merger was completed on January 1, 2009.
In February, U.S. District Judge Jed Rakoff accepted Bank of America’s $150-million settlement of U.S. Securities and Exchange Commission charges that it misled shareholders about the merger, an accord he called “half-baked justice at best” (see Judge Rejects New SEC Claims against BofA).
Both companies have already been the target of numerous lawsuits over the merger (see CA State Retirement Systems Seek to Lead BofA Class Action) and the subprime mortgage exposure issue (see Merrill Settlement with Ohio STRS Gets Final Approval).