Bank of America 2005 Annual Report Download - page 165

BANK OF AMERICA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements—(Continued)
purported class action lawsuits alleging violations of federal securities laws in connection with the underwriting of
initial public offerings (IPOs) and seeking unspecified damages. Robertson Stephens, Inc. and BAS were named in
certain of the 309 purported class actions that have been consolidated in the U.S. District Court for the Southern District
of New York as In re Initial Public Offering Securities Litigation. The plaintiffs contend that the defendants failed to
make certain required disclosures and manipulated prices of IPO securities through, among other things, alleged
agreements with institutional investors receiving allocations to purchase additional shares in the aftermarket, and false
and misleading analyst reports. On October 13, 2004, the court granted in part and denied in part plaintiffs’ motions to
certify as class actions six of the 309 cases. On June 30, 2005, the U.S. Court of Appeals for the Second Circuit granted
the underwriter defendants’ petition for permission to appeal the court’s class certification order. The appeal is pending.
The plaintiffs have reached a settlement with 298 of the issuer defendants, in which the issuer defendants
guaranteed that the plaintiffs will receive at least $1.0 billion in the settled actions and assigned to the plaintiffs the
issuers’ interest in all claims against the underwriters for “excess compensation.” On February 15, 2005, the U.S.
District Court for the Southern District of New York conditionally approved the issuer defendants’ settlement. A fairness
hearing is scheduled for April 24, 2006.
Robertson Stephens, Inc. and other underwriters also have been named as defendants in putative class action
lawsuits filed in the U.S. District Court for the Southern District of New York under the federal antitrust laws alleging
that the underwriters conspired to manipulate the aftermarkets for IPO securities and to extract anticompetitive fees in
connection with IPOs. The complaint seeks declaratory relief and unspecified treble damages. On September 28, 2005,
the Court of Appeals for the Second Circuit reversed the district court’s dismissal of the antitrust class actions,
remanding the cases to the district court for further proceedings. The defendants have filed a petition for certiorari with
the United States Supreme Court, which is pending.
Interchange Anti-trust Litigation
The Corporation and certain of its subsidiaries are defendants in putative class actions that have been transferred
for coordinated pre-trial proceedings to the U.S. District Court for the Eastern District of New York, under the caption In
Re Payment Card Interchange Fee and Merchant Discount Anti-Trust Litigation. Defendants include other financial
institutions and, among others, Visa and MasterCard. Plaintiffs seek certification of a class of retail merchants and
allege, among other claims, that defendants conspired to fix the level of interchange and merchant discount fees and that
certain practices that prohibit merchants from charging cardholders for fees the merchant pays to the credit card
companies violate the federal antitrust laws. Plaintiffs seek unspecified treble damages and injunctive relief.
Miller
On August 13, 1998, a predecessor of BANA was named as a defendant in a class action filed in Superior Court of
California, County of San Francisco, entitled Paul J. Miller v. Bank of America, N.A., challenging its practice of debiting
accounts that received, by direct deposit, governmental benefits to repay fees incurred in those accounts. The action
alleges fraud, negligent misrepresentation and violations of certain California laws. On October 16, 2001, a class was
certified consisting of more than one million California residents who have, had or will have, at any time after
August 13, 1994, a deposit account with BANA into which payments of public benefits are or have been directly
deposited by the government. The case proceeded to trial on January 20, 2004.
On March 4, 2005, the trial court entered a judgment that awards the plaintiff class restitution in the amount of
$284 million, plus attorneys’ fees, and provides that class members whose accounts were assessed an insufficient funds
fee in violation of law suffered substantial emotional or economic harm and, therefore, are entitled to an additional
$1,000 penalty. The judgment also includes injunctive relief.
On May 13, 2005, BANA filed with the California Court of Appeal, First Appellate District, a notice of appeal and,
on May 16, 2005, a writ of supersedeas, seeking a stay of the trial court’s judgment pending appeal. On November 22,
2005, the Court of Appeal granted BANA’s writ, staying the judgment, including the injunction, pending appeal. The
appeal remains pending.
Mutual Fund Operations Matters
In early 2005, the Corporation entered into settlement agreements with the New York Attorney General and the
SEC relating to late trading and market timing of mutual funds. The Corporation is continuing to respond to inquiries
from federal and state regulatory and law enforcement agencies concerning mutual fund related matters.
In addition, lawsuits seeking unspecified damages concerning mutual fund trading were brought against the
Corporation and its pre-merger FleetBoston subsidiaries, including putative class actions purportedly brought on behalf
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