Bank of America 2008 Annual Report Download - page 161

ment between MLIB and Mediafiction is null and void and seeking return
of the payments previously made by Mediafiction to MLIB. In October
2008, the Court of Rome granted Mediafiction S.p.A.’s counter-claim
against MLIB in the amount of $137 million. MLIB has appealed the rul-
ing to the Court of Appeals of the Court of Rome.
Merrill Lynch Merger-Related Matters
Beginning in January 2009, the Corporation and certain of its officers and
directors have been named as defendants in putative class actions
brought by shareholders alleging violations of Sections 10(b), 14(a) and
20(a) of the Securities Exchange Act of 1934, and SEC rules promulgated
thereunder, based on, among other things, the alleged failure to disclose
information concerning the financial performance of Merrill Lynch during
the fourth quarter of 2008 in connection with the proxy statement pur-
suant to which the Corporation’s shareholders approved the merger
between the Corporation and Merrill Lynch (the Merger) and certain other
public statements. These actions, which seek unspecified damages and
other relief, include Sklar v. Bank of America Corp., et al., Finger Interests
No. One Ltd. v. Bank of America Corp., et al., Fort Worth Employees’ Ret.
Fund v. Bank of America Corp., et. al., Palumbo v. Bank of America Corp.,
et al., Zitner v. Bank of America Corp., et al., and Stabbert v. Bank of
America Corp., et al. in the U.S. District Court for the Southern District of
New York, Boorn v. Bank of America Corp., et. al. in the U.S District Court
for the Northern District of Georgia, and Cromier v. Bank of America Corp.,
et al. in the U.S. District Court for the Northern District of California.
The Corporation and certain of its officers and directors have also
been named as defendants in a putative class action, Stern v.Bank of
America Corp., et al., brought in the Delaware Court of Chancery by
shareholders alleging breaches of fiduciary duties in connection with the
Merger.
Other putative class actions, including Dailey v. Bank of America
Corp., et al., Wilson v. Bank of America Corp., et al., Adams v. Bank of
America Corp., et al., Wright v. Bank of America Corp., et al., and Stricker
v. Bank of America Corp. Corporate Benefits Comm., et al., have been
filed in the U.S. District Court for the Southern District of New York
against the Corporation and certain of its officers and directors seeking
recovery for losses from the Bank of America 401(k) Plan pursuant to the
Employee Retirement Income Security Act. The complaints allege, among
other things, that defendants made false and misleading statements in
connection with the Merger and failed to inform participants in the plan of
risks associated with investment in the Corporation’s stock.
In addition, several derivative actions have been filed against directors
of the Corporation, and the Corporation as nominal defendant, in the U.S.
District Court for the Southern District of New York, including Louisiana
Municipal Police Employees Ret. System v. Lewis et al., Waldman v.
Lewis, et al.,Hollywood Police Officers’ Ret. System v. Lewis, et al.,
Siegel v. Lewis, et al., Lehmann v. Lewis, et al., and Smith v. Lewis, et al.
Other derivative actions have been filed in the Delaware Court of Chan-
cery, consolidated as In re Bank of America Corp. Stockholder Derivative
Litigation, and in North Carolina Superior Court, Cunniff v. Lewis, et al.
The derivative actions assert common law claims for breach of fiduciary
duty and waste of corporate assets in connection with the Merger. Certain
derivative actions filed in the U.S. District Court for the Southern District
of New York also allege violations of Section 14(a) of the Securities
Exchange Act of 1934 and Rule 14a-9 promulgated thereunder based on,
among other things, the alleged failure to disclose information concerning
the financial performance of Merrill Lynch during the fourth quarter of
2008 in connection with the proxy statement pursuant to which the
Corporation’s shareholders approved the Merger.
The Corporation and Merrill Lynch have also received and are respond-
ing to inquiries from governmental authorities relating to (1) the Merger,
and (2) incentive compensation paid to employees for 2008.
Merrill Lynch Subprime-Related Matters
In re Merrill Lynch & Co., Inc. Securities, Derivative, and ERISA
Litigation
Beginning in October 2007, Merrill Lynch & Co., Inc. and MLPFS
(collectively Merrill Lynch) and certain present and former Merrill Lynch
officers and directors were named in both putative class actions filed on
behalf of certain persons who acquired Merrill Lynch securities (the Secu-
rities Action) or participated in Merrill Lynch retirement plans (the ERISA
Action) and purported shareholder derivative actions (the Derivative
Actions) that have largely been consolidated under the caption, In re Mer-
rill Lynch & Co., Inc. Securities, Derivative, and ERISA Litigation, filed in
the U.S. District Court for the Southern District of New York. The com-
plaints allege, among other things, that the defendants misrepresented
and omitted facts related to Merrill Lynch’s exposure to subprime
collateralized debt obligations and subprime lending markets in violation
of the federal securities laws, and seek damages in unspecified
amounts. The Securities Action plaintiffs allege harm to investors who
purchased Merrill Lynch securities during the class period; the ERISA
Action plaintiffs allege harm to employees who invested retirement assets
in Merrill Lynch securities, in violation of the Employee Retirement Income
Securities Act (ERISA); and the plaintiffs in the derivative suits allege
harm to Merrill Lynch itself from alleged breaches of fiduciary duty. In
January 2009, Merrill Lynch agreed in principle to settle the Securities
Action for $475 million and the ERISA Action for $75 million. The settle-
ment is subject to a number of conditions, including court approval and
confirmatory discovery, and was reached without any adjudication of the
merits or finding of liability. On February 17, 2009, the District Court
granted the defendants’ motion to dismiss the Derivative Actions.
Louisiana Sheriffs’ Pension & Relief Fund v. Conway, et al.
On October 3, 2008, a putative class action was filed against Merrill
Lynch & Co., Inc., Merrill Lynch Capital Trust I, Merrill Lynch Capital Trust
II, Merrill Lynch Capital Trust III, MLPFS (collectively Merrill Lynch), and
certain present and former Merrill Lynch officers and directors, and
underwriters, including BAS, in New York Supreme Court. The complaint
seeks relief on behalf of all persons who purchased or otherwise acquired
Merrill Lynch debt securities issued pursuant to a shelf registration
statement dated March 31, 2006. The complaint alleges that Merrill
Lynch’s prospectuses misstated Merrill Lynch’s financial condition and
failed to disclose its exposure to losses from investments tied to sub-
prime and other mortgages, as well as its liability arising from its partic-
ipation in the auction rate securities market. On October 22, 2008, the
action was removed to federal court and on November 5, 2008 it was
accepted as a related case to In re Merrill Lynch & Co., Inc. Securities,
Derivative, and ERISA Litigation. On February 9, 2009, Merrill Lynch filed
a motion to dismiss the action.
Connecticut Carpenters Pension Fund, et al. v. Merrill Lynch & Co.,
Inc., et al.
On December 5, 2008, a class action complaint was filed against Merrill
Lynch & Co., Inc., MLPFS, Merrill Lynch Mortgage Investors, Inc., Merrill
Lynch Mortgage Lending, Inc., and Merrill Lynch Credit Corporation, Inc.
(collectively Merrill Lynch) and certain present and former Merrill Lynch
officers and directors in the Superior Court of the State of California,
County of Los Angeles on behalf of persons who purchased Merrill Lynch
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