Bank of America Corp. has agreed to pay $315 million to settle claims that its Merrill Lynch unit made false and misleading statements about the quality of mortgage-backed securities it sold to investors.
The proposed settlement, first reported by Reuters, was filed late Monday night with the U.S. District Court in Manhattan.
The settlement, which still requires the court's approval, would be one of the largest against banks that had been sued over misrepresenting the value of mortgage securities they sold during housing boom. A $285 million settlement Citigroup Inc. struck with the Securities and Exchange Commission was rejected last week by a federal judge in New York.
The suit against B of A was filed by the Public Employees' Retirement System of Mississippi. It claimed that Merrill Lynch, which B of A acquired in late 2008, made false statements or omitted key details relating to the sale of so-called mortgage pass-through certificates. Many of the securities that were initially rated as investment grade contained risky loans made by as Countrywide Financial (which B of A also acquire in 2008) and other now-defunct lenders, including New Century Financial Corp. and IndyMac Bank.
B of A agreed to the settlement without admitting or denying wrongdoing, Reuters reported.