Fallout from Bank of America Corp.'s purchase of Merrill Lynch & Co. continued to rain down on the bank this week, with the attorney general of Ohio filing what he described as one of the largest class-action lawsuits in history.
The complaint alleges that Bank of America executives hid the true state of Merrill's finances from shareholders asked to approve the purchase. They also failed to reveal promises made to former Merrill executives to pay them billions of dollars in bonuses after the deal was consummated, Attorney General Richard Cordroy claimed.
The general outline of the charges is not new, having been brought out in numerous investigations by the Securities and Exchange Commission, congressional panels, and other state attorneys general.
Earlier this month, a federal judge rejected a proposed $33 million settlement with the SEC over the charges, saying the deal did not do enough to punish the executives responsible for misleading investors. In addition, Andrew Cuomo, the attorney general of New York, has subpoenaed five Bank of America executives over the matter.
A different federal judge earlier this year gave Ohio the lead role in pursuing a class action on behalf of other states and nations and their retirement systems, many of which held large positions in Bank of America. The lawsuit filed yesterday amends an earlier complaint to take into account facts revealed during the SEC and congressional investigations.
In addition to Ohio, the other members of the class include pension funds in Texas, Sweden and the Netherlands.
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