Bank of America Corp.'s Merrill Lynch unit must face a group lawsuit by union and public employee retirement funds over mortgage-backed securities, a federal judge ruled.
U.S. District Judge Jed S. Rakoff in Manhattan certified a class of buyers of 301 tranches of mortgage-backed securities in 18 separate offerings from February 2006 through September 2007. Rakoff also granted the investors' request to appoint Bernstein Litowitz Berger & Grossmann LLP of New York as lead lawyers for the class.
"After careful consideration, and for reasons that will be stated in a forthcoming written opinion, the court hereby grants both motions," Rakoff wrote in an order released June 16.
In the litigation, filed in 2008, the investors accuse Merrill of issuing offering documents for $16.5 billion of certificates that omitted material facts and contained untrue statements, including that the underlying mortgages complied with the stated underwriting guidelines. Rakoff's certifying of the class is a boon to the investors because it means they don't have to sue individually.
Bill Halldin, a spokesman for Bank of America, of Charlotte, N.C., declined to comment.
The named plaintiffs in the case include the Mississippi Public Employees' Retirement System, the Los Angeles County Employees Retirement Association, the Wyoming State Treasurer, the Connecticut Carpenters Pension Fund and the Connecticut Carpenters Annuity Fund.
