Bank of America's (BAC) board has reached a $62.5 million settlement of a lawsuit that stems from the bank's purchase of Merrill Lynch in 2009.
The agreement, which was approved Friday by U.S. District Judge Kevin Castel in Manhattan, resolves claims by at least four pension funds that the bank's directors and officers withheld information about a falloff in Merrill's financial condition before asking shareholders to approve the deal.
The settlement, which was reported by Reuters and confirmed by sources, will result in Bank of America's being reimbursed by an insurance policy that protects the company from damages for so-called derivative lawsuits. Proceeds from the pact will go to the bank, not to shareholders.
As part of the settlement, Bank of America also has agreed to changes in its governing practices that include forming a committee of the board to review future acquisitions.
"We support the terms of the settlement and are gratified that the matter has been resolved," Bank of America spokesman Lawrence Grayson said in a statement.
Albert Myers, an attorney for the Louisiana Municipal Police Employees Retirement System, one of the pension funds that led the litigation, declined to comment. Joseph White 3rd, a lawyer for the Hollywood Police Officers Retirement System, a fellow plaintiff, did not respond immediately to a request for comment.
The pact came a week after the court rejected a proposed settlement that would have paid Bank of America $20 million.
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