Bank of America 2006 Annual Report Download - page 134

alleges that current and former 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 September 25, 2005, defendants moved to dismiss the com-
plaint. On December 1, 2005, the named plaintiffs moved to certify
classes consisting of, among others, (i) all persons who accrued or who
are currently accruing benefits under The Bank of America Pension Plan
and (ii) all persons who elected to have amounts representing their
account balances under The Bank of America 401(k) Plan transferred to
The Bank of America Pension Plan. The motion to dismiss and the motion
for class certification are 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 trans-
fers were in accordance with applicable law. In December 2005, the
Corporation received a Technical Advice Memorandum from the National
Office of the IRS that concluded that the amendments made to The Bank
of America 401(k) Plan in 1998 to permit the voluntary transfers to The
Bank of America Pension Plan violated the anti-cutback rule of Sec-
tion 411(d)(6) of the Internal Revenue Code. In November 2006, the
Corporation received another Technical Advice Memorandum denying the
Corporation’s request that the conclusion reached in the first Technical
Advice Memorandum be applied prospectively only. The Corporation con-
tinues to participate in administrative proceedings with the IRS regarding
issues raised in the audit.
On September 29, 2004, a separate putative class action, entitled
Donna C. Richards v. 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 all former and 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 Pen-
sion Plan at any time since January 1, 1997. The complaint alleged that
FleetBoston or its predecessor violated ERISA by amending the Fleet
Financial Group, Inc. Pension Plan (a predecessor to the Fleet Pension
Plan) to add a cash balance benefit formula without notifying participants
that the amendment reduced their plan benefits, by conditioning the
amount of benefits payable under the Fleet Pension Plan upon the form of
benefit elected, by reducing the rate of benefit accruals on account of age,
and by failing to inform participants of the correct amount of their pen-
sions and related claims. The complaint also alleged violation of the “anti-
backloading” rule of ERISA. The complaint sought equitable and remedial
relief, including a declaration that the amendment was ineffective, addi-
tional unspecified benefit payments, attorneys’ fees and interest.
On March 31, 2006, the court certified a class with respect to plain-
tiff’s claims that (i) the cash balance benefit formula reduces the rate of
benefit accrual on account of age, (ii) the participants did not receive
proper notice of the alleged reduction of future benefit accrual, and (iii) the
summary plan description was not adequate. Plaintiff filed an amended
complaint realleging the three claims as to which a class was certified and
amending two claims the court had dismissed, and defendants moved to
dismiss plaintiff’s amended claims. The court dismissed plaintiff’s
amended anti-backloading claim and a portion of the plaintiff’s amended
breach of fiduciary duty claim. The court subsequently certified a class as
to the portions of plaintiff’s breach of fiduciary duty claim that were not
dismissed. On December 12, 2006, plaintiff filed a second amended
complaint adding new allegations to the breach of fiduciary duty and
summary plan description claims, and a new claim alleging that the Fleet
Pension Plan violated ERISA in calculating lump-sum distributions. On
December 22, 2006, plaintiff filed a motion to extend class certification to
the new allegations and claim in the second amended complaint.
Refco
Beginning in October 2005, BAS was named as a defendant in several
putative class action lawsuits filed in the U.S. District Court for the South-
ern District of New York relating to Refco Inc. (Refco). The lawsuits, which
have been consolidated and seek unspecified damages, name as other
defendants Refco’s outside auditors, certain officers and directors of
Refco, other financial services companies, and other individuals and
companies. The lawsuits allege violations of the disclosure requirements
of the federal securities laws in connection with Refco’s senior sub-
ordinated notes offering in August 2004 and Refco’s initial public offering
in August 2005. BAS and certain other underwriter defendants have
moved to dismiss the claims relating to the notes offering. BAS is also
responding to various regulatory inquiries relating to Refco.
Trading and Research Activities
The SEC has been conducting a formal investigation with respect to cer-
tain trading and research-related activities of BAS. These matters primarily
arose during the period 1999-2001 in BAS’ San Francisco operations. In
September 2005, the SEC staff advised BAS that it intends to recommend
to the SEC an enforcement action against BAS in connection with these
matters. This matter remains pending.
132 Bank of America 2006