Financial services giant Bank of America Corp. (BAC) and its Merrill Lynch & Co. unit have been sued separately in two lawsuits by the New York State Comptroller Thomas DiNapoli for violating federal securities laws, according to a release from the office of the New York State Comptroller.
The law suits were filed in the U.S. District Court for the Southern District of New York in order to protect the interests of the New York State Common Retirement Fund, the state's largest pension fund. DiNapoli is the sole trustee of the fund, worth about $132.6 billion, that handles pensions for more than one million members, beneficiaries and retirees, which is funded by millions of New York taxpayers.
In a statement, DiNapoli said, "These companies thought they could get away with profiting at the expense of New York's pensioners and taxpayers through fraudulent activities and misleading public disclosures, and they were mistaken. Today, these companies have been served notice that they will be held accountable for losses caused through their misconduct."
DiNapoli decided to pursue his own lawsuits after dropping out of the existing class-action suit against the companies in order have a better chance to get a higher recovery. DiNapoli filed the lawsuits as the administrative head of the New York State Retirement Systems and as trustee of the Fund. The law firm of Entwistle & Cappucci LLP is managing the lawsuits.
DiNapoli seeks from Bank of America the recovery of losses the fund incurred based upon the company's misrepresentation and concealment of material facts in connection with its acquisition of Merrill Lynch. It also seeks from Merrill Lynch the recovery of losses the fund suffered from fraud and deception related to Merrill's exposure to securities backed by risky subprime mortgages.
In February, U.S. District Judge for the Southern District of New York, Jed Rakoff, granted approval to Bank of America for a $150 million settlement with the Securities and Exchange Commission over charges that the bank failed to properly disclose employee bonuses and financial losses at Merrill Lynch before shareholders approved the merger of the companies.
The New York Attorney General Andrew Cuomo has also filed separate civil fraud charges against Bank of America.
BAC closed Thursday's regular trading session at $13.66, up $0.30 or 2.25% on a volume of 185.76 million shares, marginally higher than the three-month average volume of 182.78 million shares.
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