A class action lawsuit was filed against Bank of America Corporation (NYSE: BAC) and various individuals on behalf of all persons who held securities of Bank of America as of October 10, 2008 entitled to vote (the "Class") at the special meeting of stockholders called to approve Bank of America's Merger with Merrill Lynch & Co. ("the Merger"). The case, filed in the United States District Court for the Northern District of Georgia, alleges that Bank of America and its Board of Directors violated the Securities Exchange Act of 1934. The case has been assigned Civil Action No. 09 Civ. 0159.
Bank of America is a financial holding company that provides banking, investing, asset management and other financial and risk-management products and services to individual consumers and businesses. The complaint alleges that Defendants solicited proxies from Class members by means of a Proxy Statement which contained false and misleading statements concerning the Merger and its benefits to shareholders, as well as failing to state material facts which were necessary to make the statements in the Proxy not false and misleading. As a result of the misrepresentations or omissions of material facts from the Proxy, the Class members were denied the opportunity to make an informed decision in voting on the Merger.
Following the close of the Merger on January 1, 2009, Bank of America disclosed for the first time in a press release on January 16, 2008, the true extent of Merrill Lynch's dire financial condition and Bank of America's appeal to the federal government for assistance to assist in absorbing losses attributable to Merrill Lynch's investments. The press release unexpectedly announced that Bank of America suffered a fourth-quarter loss of $1.79 billion, that it had accepted an additional $20 billion in aid from the federal government, and that the federal government had guaranteed in excess of $100 billion in loan losses to help Bank of America absorb toxic loan-backed security assets it acquired in its merger with Merrill Lynch. Following that announcement, Bank of America's stock fell from approximately $9 to approximately $5 per share, a very substantial drop.
