Bank of America 2011 Annual Report Download - page 224

222 Bank of America 2011
motion for class certification. On February 21, 2012, the
Corporation filed a petition requesting that the U.S. Court of
Appeals for the Second Circuit review the district court’s order
granting Securities Plaintiffs’ motion for class certification.
Several individual plaintiffs have opted to pursue claims apart
from the In re Bank of America Securities, Derivative, and
Employment Retirement Income Security Act (ERISA) Litigation and,
accordingly, have initiated individual actions in the U.S. District
Court for the Southern District of New York relying on substantially
the same facts and claims as the Securities Plaintiffs.
On January 13, 2010, the Corporation, Merrill Lynch and certain
of the Corporation’s current and former officers and directors were
named in a purported class action filed in the U.S. District Court
for the Southern District of New York entitled Dornfest v. Bank of
America Corp., et al. The action is purportedly brought on behalf
of investors in Corporation option contracts between September
15, 2008 and January 22, 2009 and alleges that during the class
period approximately 9.5 million Corporation call option contracts
and approximately eight million Corporation put option contracts
were traded on seven of the Options Clearing Corporation
exchanges. The complaint alleges that defendants violated
Sections 10(b) and 20(a) of the Securities Exchange Act of 1934
and SEC rules promulgated thereunder. Plaintiffs seek unspecified
monetary damages, legal costs and attorneys’ fees. On April 9,
2010, the court consolidated this action with the consolidated
securities action in the In re Bank of America Securities, Derivative
and Employment Retirement Income Security Act (ERISA) Litigation,
and ruled that plaintiffs may pursue the action as an individual
action. In August 2011, plaintiff again asked the court for
permission to pursue claims on a class basis, which the court
again denied in an order issued in September 2011. Plaintiffs have
attempted to appeal that ruling.
Derivative Actions
The Corporation and certain current and former directors are
named as defendants in several putative class and derivative
actions in the Delaware Court of Chancery, including: Rothbaum
v. Lewis; Southeastern Pennsylvania Transportation Authority v.
Lewis; Tremont Partners LLC v. Lewis; Kovacs v. Lewis; Stern v. Lewis;
and Houx v. Lewis, brought by shareholders alleging breaches of
fiduciary duties and waste of corporate assets in connection with
the Acquisition. On April 27, 2009, the Delaware Court of Chancery
consolidated the derivative actions under the caption In re Bank
of America Corporation Stockholder Derivative Litigation. The
consolidated derivative complaint seeks, among other things,
unspecified monetary damages, equitable remedies and other
relief. On April 30, 2009, the putative class claims in the Stern v.
Lewis and Houx v. Lewis actions were voluntarily dismissed without
prejudice. Trial is scheduled for October 2012.
In addition, the JPML ordered the transfer of actions related to
the Acquisition that had been pending in various federal courts to
the U.S. District Court for the Southern District of New York for
coordinated or consolidated pretrial proceedings. These actions
have been separately consolidated and are now pending under the
caption In re Bank of America Securities, Derivative and Employment
Retirement Income Security Act (ERISA) Litigation.
On October 9, 2009, plaintiffs in the derivative actions in the
In re Bank of America Securities, Derivative and Employment
Retirement Income Security Act (ERISA) Litigation (the Derivative
Plaintiffs) filed a consolidated amended derivative and class action
complaint. The amended complaint names as defendants certain
of the Corporation’s current and former directors, officers and
financial advisors, and certain of Merrill Lynch’s current and former
directors and officers. The Corporation is named as a nominal
defendant with respect to the derivative claims. The amended
complaint asserts claims for, among other things: (i) violation of
federal securities laws; (ii) breach of fiduciary duties; (iii) the return
of incentive compensation that is alleged to be inappropriate in
view of the work performed and the results achieved by certain of
the defendants; and (iv) contribution in connection with the
Corporation’s exposure to significant liability under state and
federal law. The amended complaint seeks unspecified monetary
damages, equitable remedies and other relief. On February 8,
2010, the Derivative Plaintiffs voluntarily dismissed their claims
against each of the former Merrill Lynch officers and directors
without prejudice. The Corporation and its co-defendants filed
motions to dismiss, which were granted in part on August 27,
2010. On October 18, 2010, the Corporation and its co-defendants
answered the remaining allegations asserted by the Derivative
Plaintiffs.
ERISA Actions
On October 9, 2009, plaintiffs in the ERISA actions in the In re
Bank of America Securities, Derivative and Employment Retirement
Income Security Act (ERISA) Litigation (the ERISA Plaintiffs) filed a
consolidated amended complaint for breaches of duty under
ERISA. The amended complaint is brought on behalf of a purported
class that consists of participants in the Corporation’s 401(k) Plan,
the Corporation’s 401(k) Plan for Legacy Companies, the CFC 401
(k) Plan (collectively, the 401(k) Plans) and the Corporation’s
Pension Plan. The amended complaint alleges violations of ERISA,
based on, among other things: (i) an alleged failure to prudently
and loyally manage the 401(k) Plans and Pension Plan by
continuing to offer the Corporation’s common stock as an
investment option or measure for participant contributions; (ii) an
alleged failure to monitor the fiduciaries of the 401(k) Plans and
Pension Plan; (iii) an alleged failure to provide complete and
accurate information to the 401(k) Plans and Pension Plan
participants with respect to the Merrill Lynch and Countrywide
acquisitions and related matters; and (iv) alleged co-fiduciary
liability for these purported fiduciary breaches. The amended
complaint seeks unspecified monetary damages, equitable
remedies and other relief. On August 27, 2010, the court
dismissed the complaint brought by plaintiffs in the consolidated
ERISA action in its entirety. The ERISA Plaintiffs filed a notice of
appeal of the court’s dismissal of their actions. The parties then
stipulated to the dismissal of the appeal with the agreement that
the ERISA Plaintiffs can reinstate their appeal at any time up until
July 27, 2012.
NYAG Action
On February 4, 2010, the New York Attorney General (NYAG) filed
a civil complaint in New York Supreme Court entitled People of the
State of New York v. Bank of America, et al. The complaint names
as defendants the Corporation and the Corporation’s former CEO
and CFO, and alleges violations of Sections 352, 352-c(1)(a), 352-
c(1)(c) and 353 of the New York General Business Law, commonly
known as the Martin Act, and Section 63(12) of the New York
Executive Law. The complaint seeks an unspecified amount in
disgorgement, penalties, restitution, and damages and other
equitable relief.