Bank of America 2012 Annual Report Download - page 231

Bank of America 2012 229
Securities Exchange Act of 1934 (the Exchange Act), and Sections
11, 12(a)(2) and 15 of the Securities Act of 1933 (the Securities
Act) and asserted damages based on the drop in the stock price
upon subsequent disclosures.
In February 2012, the court granted a motion for class
certification. On November 30, 2012, the parties entered into a
settlement agreement. The agreement, which is subject to court
approval, provides for a payment by the Corporation of $2.4 billion,
an amount that was fully accrued as of September 30, 2012, and
the institution and/or continuation of certain corporate governance
enhancements until the later of January 1, 2015 or 18 months
following the court’s final approval of the settlement. In exchange,
Securities Plaintiffs released their claims against all defendants
and certain other persons or entities affiliated with defendants.
On December 4, 2012, the court issued an order granting
preliminary approval of the settlement and scheduling a final
settlement hearing for April 5, 2013.
Individual Securities Actions
Certain shareholders have opted to pursue their claims under the
Exchange Act and/or Securities Act apart from the Consolidated
Securities Class Action, and these individual actions were
coordinated for pre-trial purposes in the Consolidated Action.
These individual plaintiffs assert substantially the same facts and
claims as the class action plaintiffs.
Derivative Actions
On October 9, 2009, plaintiffs in the derivative action in the
Consolidated Action (Derivative Plaintiffs) filed a consolidated
amended derivative and class action complaint. The amended
complaint named 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 was named as a nominal defendant with respect
to the derivative claims. Derivative Plaintiffs asserted 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. On February 8, 2010, Derivative Plaintiffs voluntarily
dismissed their claims against each of the former Merrill Lynch
officers and directors without prejudice.
On June 19, 2012, the parties entered into a settlement
agreement. On January 11, 2013, the district court granted final
approval of the settlement.
The Corporation and certain current and former directors are
also named as defendants in a consolidated derivative action in
the Delaware Court of Chancery under the caption In re Bank of
America Corporation Stockholder Derivative Litigation brought by
shareholders alleging breaches of fiduciary duties and waste of
corporate assets in connection with the Acquisition. The
consolidated derivative complaint seeks, among other things,
unspecified monetary damages, equitable remedies and other
relief. On May 9, 2012, the court stayed the action pending the
New York court’s consideration of the proposed settlement in the
derivative action in the Consolidated Action. In the settlement of
the derivative action in the Consolidated Action, plaintiffs in the
Delaware action agreed to withdraw their claims.
ERISA Actions
On October 9, 2009, plaintiffs in the ERISA actions in the
Consolidated Action (ERISA Plaintiffs) asserted claims on behalf
of a purported class consisting of participants in certain of the
Corporation’s 401(k) plans (collectively, the 401(k) Plans). ERISA
Plaintiffs alleged violations of ERISA and sought unspecified
monetary damages, equitable remedies and other relief. On August
27, 2010, the court dismissed the complaint and ERISA Plaintiffs
appealed. On January 14, 2013, the parties stipulated to the
withdrawal of the appeal with prejudice.
NYAG Action
On February 4, 2010, the 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 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.
LIBOR and Other Reference Rate Inquiries and Litigation
The Corporation has received subpoenas and information requests
from government authorities in North America, Europe and Asia,
including the U.S. DOJ, the U.S. Commodity Futures Trading
Commission and the U.K. FSA, concerning submissions made by
panel banks in connection with the setting of London interbank
offered rates (LIBOR) and European and other reference rates. The
Corporation is cooperating with these inquiries.
In addition, the Corporation and BANA have been named as
defendants along with most of the other LIBOR panel banks in a
series of individual and class actions in various U.S. federal and
state courts relating to defendants’ LIBOR contributions. All cases
naming the Corporation have been or are in the process of being
consolidated for pre-trial purposes in the U.S. District Court for
the Southern District of New York by the JPML. The Corporation
expects that any future cases naming the Corporation will similarly
be consolidated for pre-trial purposes. Plaintiffs allege that they
held or transacted in U.S. dollar LIBOR-based derivatives or other
financial instruments and sustained losses as a result of collusion
or manipulation by defendants regarding the setting of U.S. dollar
LIBOR. Plaintiffs assert a variety of claims, including antitrust and
Racketeer Influenced and Corrupt Organizations claims and seek
compensatory, treble and punitive damages, and injunctive relief.
Montgomery
The Corporation, several current and former officers and directors,
Banc of America Securities LLC (BAS), Merrill Lynch, Pierce, Fenner
& Smith (MLPF&S) and other unaffiliated underwriters have been
named as defendants in a putative class action filed in the U.S.
District Court for the Southern District of New York entitled
Montgomery v. Bank of America, et al. Plaintiff filed an amended
complaint on January 14, 2011. Plaintiff seeks to sue on behalf
of all persons who acquired certain series of preferred stock
offered by the Corporation pursuant to a shelf registration
statement dated May 5, 2006. Plaintiff’s claims arise from three
offerings dated January 24, 2008, January 28, 2008 and May 20,
2008, from which the Corporation allegedly received proceeds of
$15.8 billion. The amended complaint asserts claims under
Sections 11, 12(a)(2) and 15 of the Securities Act of 1933, and
alleges that the prospectus supplements associated with the