Bank of America 2004 Annual Report Download - page 132

On September 29, 2004, a separate putative class action,
entitled Donna C. Richards vs. FleetBoston Financial Corp. and the
FleetBoston Financial Pension Plan (Fleet Pension Plan), was filed
in the U.S. District Court for the District of Connecticut on behalf
of any and all persons who are former or current Fleet employees
who on December 31, 1996, were not at least age 50 with 15
years of vesting service and who participated in the Fleet Pension
Plan before January 1, 1997, and who have participated in the
Fleet Pension Plan at any time since January 1, 1997.
The complaint alleges that FleetBoston or its predecessor vio-
lated ERISA by amending the Fleet Financial Group, Inc. Pension Plan
(a predecessor to the Fleet Pension Plan) to add a cash balance ben-
efit formula without notifying participants that the amendment signif-
icantly reduced their plan benefits, by conditioning the amount of
benefits payable under the Fleet Pension Plan upon the form of ben-
efit elected, by reducing the rate of benefit accruals on account of
age, and by failing to inform participants of the correct amount of
their pensions and related claims. The complaint also alleges that
the Fleet Pension Plan violates the “anti-backloading” rule of ERISA.
The complaint seeks equitable and remedial relief, including
a declaration that the cash balance amendment to the Fleet Pension
Plan was ineffective, additional unspecified benefit payments,
attorneys’ fees and interest.
On December 28, 2004, plaintiff filed a motion for class certifi-
cation. On January 25, 2005, the defendants in the Richards case
moved to dismiss the action. These motions are pending.
WorldCom, Inc. (WorldCom)
BAS, Banc of America Securities Limited (BASL), FSI, other under-
writers of WorldCom bonds issued in 2000 and 2001, and other
parties have been named as defendants in a class action lawsuit
filed in the U.S. District Court for the Southern District of New York
entitled WorldCom Securities Litigation. The complaint alleges claims
against BAS and Fleet under Sections 11 and 12 of the Securities
Act of 1933 in connection with 2000 (BAS) and 2001 (BAS and Fleet)
public bond offerings and is brought on behalf of purchasers and
acquirers of bonds issued in or traceable to these offerings. On
October 24, 2003, the court certified a class consisting of “all
persons and entities who purchased or otherwise acquired publicly-
traded securities of WorldCom during the period beginning April 29,
1999 through and including June 25, 2002 and who were injured
thereby.” Plaintiffs seek damages up to the amount of the public bond
offerings underwritten by BAS and FSI, allegedly totaling approxi-
mately $1.5 billion. The court granted BASL’s motion to dismiss all
claims against BASL. On December 15, 2004, the court issued a rul-
ing, which granted in part and denied in part the underwriters’ sum-
mary judgment motion and the lead plaintiff’s summary judgment
motion. On December 30, 2004, the underwriters filed a motion for
reconsideration on the issue of plaintiff standing and a motion seek-
ing resolution of certain issues not decided by the summary judg-
ment ruling. These motions are pending. A trial date has been
scheduled for March 17, 2005.
In addition, the Corporation, BAS, BASL, Fleet and Robertson
Stephens International Limited (RSIL), along with other persons and
entities, have been named as defendants in numerous individual
actions that were filed in either federal or state courts arising out of
alleged accounting irregularities of the books and records of
WorldCom. Plaintiffs in these actions are typically institutional
investors, including state pension funds, who allegedly purchased
debt securities issued by WorldCom pursuant to public offerings in
1997, 1998, 2000 or 2001 and a private offering in December 2000.
The majority of the complaints assert claims under Section 11 of the
Securities Act of 1933, and some complaints include additional
claims under the Securities Act of 1933 and/or claims under the
Securities Exchange Act of 1934, state securities laws, other state
statutes and common law theories. The complaints seek damages of
unspecified amounts. Most of these cases were filed in state court,
subsequently removed by defendants to federal courts and then
transferred by the MDL Panel to the court where they were consoli-
dated with WorldCom Securities Litigation for pre-trial purposes.
Certain plaintiffs in these actions appealed the court’s decision deny-
ing their requests that the court remand their actions to the state
courts in which they were originally filed. The Court of Appeals for the
Second Circuit affirmed the court in May 2004. Certain plaintiffs peti-
tioned the U.S. Supreme Court for a writ of certiorari, which the U.S.
Supreme Court denied on January 10, 2005.
Three other such actions, one in Illinois state court, another
in Tennessee state court, and another in Alabama state court
remain pending.
Other Regulatory Matters
In the course of its business, the Corporation is subject to regulatory
examinations, information gathering requests, inquiries and investi-
gations. BAS and Banc of America Investment Services, Inc. (BAI) are
registered broker/dealers and are subject to regulation by the SEC,
the National Association of Securities Dealers, the New York Stock
Exchange and state securities regulators. In connection with several
formal and informal inquiries by those agencies, BAS and BAI have
received numerous requests, subpoenas and orders for documents,
testimony and information in connection with various aspects of their
regulated activities.
The SEC is currently conducting a formal investigation with
respect to certain trading and research-related activities of BAS dur-
ing the period 1999 through 2001. The investigation is continuing,
and the SEC staff has recently indicated informally that it is consid-
ering whether to recommend enforcement action against BAS with
respect to certain of the matters under investigation.
Note 13 Shareholders’ Equity and Earnings Per Common Share
During the second quarter of 2004, the Board approved a 2-for-1 stock
split in the form of a common stock dividend and increased the quar-
terly cash dividends 12.5 percent from $0.40 to $0.45 per post-split
share. The common stock dividend was effective August 27, 2004 to
common shareholders of record on August 6, 2004 and the cash div-
idend was effective September 24, 2004 to common shareholders of
record on September 3, 2004. All prior period common share and
related per common share information has been restated to reflect
the 2-for-1 stock split.
BANK OF AMERICA 2004 131