Bank of America 2004 Annual Report Download - page 131

On January 8, 2004, The Public Prosecutor’s Office for the Court
of Milan, Italy identified Luca Sala, a former employee, as a subject
of its investigation into the Parmalat matter. On March 2, 2004, the
Public Prosecutor further advised the Corporation that the activities
of the Corporation and two additional employees in Milan, Italy, Luis
Moncada and Antonio Luzi, were also under investigation. These
employees concurrently submitted letters of resignation.
On May 26, 2004, the Public Prosecutor’s Office filed criminal
charges against the Corporation’s former employees, Antonio Luzi, Luis
Moncada, and Luca Sala, alleging market manipulation in connection
with Parmalat. The Public Prosecutor’s Office also filed a related charge
against the Corporation asserting administrative liability based on an
alleged failure to maintain an organizational model sufficient to prevent
the alleged criminal activities of its former employees.
Preliminary hearings regarding the administrative charge
against the Corporation and the criminal charges against the former
employees have been held in the Court of Milan, Italy, the first of
which took place on October 5, 2004. At this and subsequent hear-
ings, a number of persons filed requests to participate in the pro-
ceedings as damaged civil parties under Italian law. Various
preliminary hearings and pre-trial proceedings are on-going.
On March 5, 2004, a First Amended Complaint was filed in a
putative securities class action pending in the U.S. District Court for
the Southern District of New York entitled Southern Alaska Carpenters
Pension Fund et al. v. Bonlat Financing Corporation et al., which names
the Corporation as a defendant. The First Amended Complaint
alleges causes of action against the Corporation for violations of the
federal securities laws based upon the Corporation’s alleged role in
the alleged Parmalat accounting fraud. This action was consolidated
with several other class actions filed against multiple defendants,
and on October 18, 2004, an Amended Consolidated Complaint was
filed. Unspecified damages are being sought. The Corporation filed a
motion to dismiss the Amended Consolidated Complaint. The motion
to dismiss is pending.
On October 7, 2004, Enrico Bondi filed an action in the U.S.
District Court for the Western District of North Carolina against the
Corporation and various related entities, entitled Dr. Enrico Bondi,
Extraordinary Commissioner of Parmalat Finanziaria, S.p.A., et al v.
Bank of America Corporation, et al (the Bondi Action). The complaint
alleges federal and state RICO claims and various state law claims,
including fraud. The plaintiff seeks $10 billion in damages. A motion
to dismiss is pending.
The Corporation has requested that the MDL Panel consolidate
and/or coordinate pre-trial proceedings in the Bondi Action with other
lawsuits filed by Enrico Bondi against non-Bank of America defen-
dants. On December 14, 2004, the Corporation requested that the
Bondi Action be transferred to the federal court in New York for pre-
trial purposes. That request is pending before the MDL Panel.
Pension Plan Matters
The Corporation is a defendant in a putative class action, entitled
Anita Pothier, et al. v. Bank of America Corp., et al., which was filed
in June 2004 in the U.S. District Court for the Southern District of
Illinois. The action is brought on behalf of all participants in or ben-
eficiaries of any cash balance defined benefit plan maintained by
the Corporation or its predecessors. The complaint names as
defendants the Corporation, Bank of America, N.A., The Bank of
America Pension Plan (formerly known as the NationsBank Cash
Balance Plan) and its predecessor plans, The Bank of America
401(k) Plan (formerly known as the NationsBank 401(k) Plan) and
its predecessor plans, the Bank of America Corporation Corporate
Benefits Committee and various members thereof, various current
and former directors of the Corporation and certain of its prede-
cessors, and PricewaterhouseCoopers LLP. The named plaintiffs are
alleged to be current or former participants in one or more
employee benefit pension plans sponsored or participated in by the
Corporation or its predecessors.
The complaint alleges the defendants violated various provi-
sions of ERISA, including that the cash balance formula of The Bank
of America Pension Plan and a predecessor plan, the BankAmerica
Pension Plan, violated ERISA’s defined benefit pension plan stan-
dards. In addition, the complaint alleges age discrimination in the
design and operation of the cash balance plans at issue, improper
benefit to the Corporation and its predecessors, interference with the
attainment of pension rights, and various prohibited transactions and
fiduciary breaches. The complaint further alleges that certain volun-
tary transfers of assets by participants in The Bank of America
401(k) Plan and certain predecessor plans to The Bank of America
Pension Plan violated ERISA.
The complaint alleges that the participants in these plans are
entitled to greater benefits and seeks declaratory relief, monetary relief
in an unspecified amount, equitable relief, including an order reforming
The Bank of America Pension Plan, attorneys’ fees and interest.
On February 9, 2005, the defendants in the Pothier action
moved to transfer the venue of the Pothier action to the U.S. District
Court for the Western District of North Carolina and to dismiss the
complaint. These motions are pending. On February 8, 2005, plain-
tiffs informed the court that they intend to file a motion for partial
summary judgment with respect to their claim relating to the calcula-
tion of lump sum benefits under the NationsBank Cash Balance Plan
and/or The Bank of America Pension Plan. On February 18, 2005,
one of the named plaintiffs moved to certify a class with respect to
that claim. The motion for class certification is pending.
The IRS is conducting an audit of the 1998 and 1999 tax returns
of The Bank of America Pension Plan and The Bank of America 401(k)
Plan. This audit includes a review of voluntary transfers by participants
of 401(k) plan assets to The Bank of America Pension Plan and
whether such transfers were in accordance with applicable law. By let-
ter dated December 10, 2004, the IRS advised the Corporation that
the IRS has tentatively concluded that the voluntary transfers of par-
ticipant accounts from The Bank of America 401(k) Plan to The Bank
of America Pension Plan violated the anti-cutback rule of Section
411(d)(6) of the Internal Revenue Code. The Corporation is entitled to
a conference of right to discuss this tentative conclusion before the
IRS reaches a final decision, and the Corporation intends to exercise
this right. The Corporation believes that it could be approximately one
to two years before these IRS audit issues are resolved.
130 BANK OF AMERICA 2004