Bank of America Corp(NYSE:BAC) has been doling out billions of dollars as settlements due to various lawsuits, which have resulted from its acquisition of other banks such as Merrill Lynch & Co, as well as other banks such as Countrywide financial.
Of late, BofA is said to have made a settlement under which they agreed to pay $2.43 Billion as damages, to compensate for the allegations which their shareholders have held against them. The primary complaint is that the Bank of America withheld crucial information about Merrill Lynch during the acquisition of the bank at the time of the very infamous financial crisis of 2008. While its competitors are making huge profits, the Bank of America is still suffering due to the decisions it made during the time of the economical crisis.
After the Lehman Brothers admitted defeat in 2008, the Bank of America swooped in to buy the financial firm. However, they were unsure of what to do towards the later part of the settlement for the acquisition, and they wanted to take the deal off the table, but on account of it being too late, they had to go through with it anyway. The shareholders has voted for the deal after the idea of the acquisition was put before them, and they have recently decided to sure BofA on account of not being told about Merrill Lynch’s exact losses before the deal was made.
This has become a major issue now, because Merrill Lynch had been neck-deep in losses when the Bank of America took over. The company was at a loss of about $15 Billion, and it had also decided to give its employees bonuses worth about $5.8 billion. The shareholders were not aware of the exact figures when former Chief Executive Ken Lewis had proposed the deal to everyone. Since the acquisitions, the shares of the Bank of America have dropped quite badly, and the bank has only been incurring regular amounts of losses. The court, however, is happy about the settlement, instead of the trial, which was set for the 22nd of October. Former Chief Executive, Ken Lewis refused to comment upon these developments.