CHARLOTTE, N.C. – Bank of America has agreed to pay $315 million to settle claims by investors that they were misled about mortgage-backed investments sold by its Merrill Lynch unit.
The settlement was announced in court papers in the U.S. District Court in Manhattan, and still requires approval by a judge who earlier rejected a similar settlement agreement by another bank.
The class action suit had been filed by the Public Employees’ Retirement System of Mississippi pension fund, and argued that the investments were backed by low quality mortgages written by subprime lenders Countrywide Financial Corp., First Franklin Financial, and IndyMac Bancorp, which failed in 2008.
During the first six months of 2011 Bank of America agreed to put up $12.7-billion to settle similar claims from different groups of investors.
U.S. District Judge Jed Rakoff must approve the BofA settlement; Rakoff earlier rejected a $285 million settlement that Citigroup Inc. reached with the SEC.
