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BofA investor lawsuit wins class-action status
Breaking Legal News |
2012/02/08 09:40
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Investors suing Bank of America Corp won class-action status for their lawsuit accusing the bank of fraudulently misleading them about the 2008 takeover of Merrill Lynch & Co and the size of Merrill's losses and bonus payouts.
U.S. District Judge P. Kevin Castel in Manhattan on Monday rejected the second-largest U.S. bank's argument that the investors could not prove they suffered losses by relying on materially misleading statements or omissions.
Among the other defendants who were also sued and opposed class certification were former Bank of America Chief Executive Kenneth Lewis, former Merrill Chief Executive John Thain, former Bank of America Chief Financial Officer Joe Price, and Bank of America's board of directors.
Lewis had won initial praise for saving Merrill from possible collapse when he agreed to buy it on September 15, 2008, the day Lehman Brothers Holdings Inc went bankrupt.
But investors later faulted the bank for not disclosing the scope of Merrill's soaring losses, which reached $15.84 billion in the fourth quarter of 2008, before December 2008 shareholder votes on the merger. They also objected to Merrill's having paid $3.6 billion of bonuses despite the losses. |
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Class action or a representative action is a form of lawsuit in which a large group of people collectively bring a claim to court and/or in which a class of defendants is being sued. This form of collective lawsuit originated in the United States and is still predominantly a U.S. phenomenon, at least the U.S. variant of it. In the United States federal courts, class actions are governed by Federal Rules of Civil Procedure Rule. Since 1938, many states have adopted rules similar to the FRCP. However, some states like California have civil procedure systems which deviate significantly from the federal rules; the California Codes provide for four separate types of class actions. As a result, there are two separate treatises devoted solely to the complex topic of California class actions. Some states, such as Virginia, do not provide for any class actions, while others, such as New York, limit the types of claims that may be brought as class actions. |
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