Class Action Suit Filed Against Bank of America for ERISA Violations

 

401(k) Plan Participants Claim Violation of Fiduciary Duty over Merrill Lynch Purchase

 

SAN FRANCISCO, March 13, 2009 Ė A class action lawsuit was filed today against Bank of America for violations of the Employee Retirement Income Security Act (ERISA).The suit, brought in the U.S. District Court for the Southern District of New York, alleges that Bank of America, its Corporate Benefits Committee and Board of Directors violated their fiduciary duty to participants and beneficiaries of the bankís 401(k) Plan and that the defendants knew Bank of America stock was not a prudent plan investment because the bankís acquisition of Merrill Lynch & Co., Inc. would cause billions in losses.

 

Bank of America announced its acquisition of Merrill Lynch on Sept. 15, 2008.In the four quarters prior to the announcement, Merrill Lynch reported losses totaling $17 billion.The suit alleges that based on Merrill Lynchís financial condition, the defendants should have investigated whether Bank of America stock was a prudent retirement plan investment.

 

The complaint alleges that ďa reasonably prudent fiduciary would have, at the very least, examined whether Bank of America stock was a good investment for the plan, particularly given that the Bank of America Stock Fund represented a huge percentage, if not the majority, of the retirement planís assets.A simple plan review would have uncovered uncertainty about the true scope of Merrill Lynchís liabilities.Instead this fiduciary duty was neglected, and the retirement plan lost billions.Ē

 

On Oct. 10, 2008, the record date under the proxy statement, Bank of America stock closed at $20.41.By Jan. 20, 2009, when the market had fully absorbed the information about Merrill Lynchís predicted and previously undisclosed liabilities, the stock closed at $5.10, a 75 percent decline.

 

The suit also claims the defendants failed to correct misleading communications to plan participants.In November 2008, Bank of America delivered proxy materials to participants and other shareholders describing the Merrill Lynch acquisition.The materials instructed participants to rely only on the information contained therein or incorporated by reference; yet they failed to disclose the risk factors and massive liabilities and losses attributable to Merrill Lynch, which were ultimately revealed in January 2009.The proxy materials also failed to disclose that Merrill Lynchís assets were too illiquid and complex to value with any degree of certainty and vastly understated the financial institutionís liabilities.Further and despite the defendantís knowledge of mounting Merrill Lynch losses in the fourth quarter, this information was not disclosed to the planís participants prior to the shareholder vote on the acquisition.

 

The plaintiffs are represented by Garrett Wotkyns of Schneider Wallace Cottrell Brayton Konecky LLP and Gregory Y. Porter of Bailey & Glasser LLP.Individuals that participated in the plan and are interested in joining the class can obtain additional information by calling Wotkyns at 480.607.4368 or Porter at 202.543.0226.All participants in the Bank of America 401(k) Plan who had an in investment in the Bank of America Stock Fund from Sept.15, 2008 to the present may join the class.

 

Schneider Wallace Cottrell Brayton Konecky LLP represents workers and consumers in class action litigation matters around the country.For 15 years, the firmís attorneys have handled matters involving workplace benefits, disability rights, employment discrimination issues and consumer rights.On the Web:www.schneiderwallace.com

 

Bailey & Glasser LLP represents employees and consumers in complex national and state class actions in federal and state courts across the country.The attorneys at Bailey & Glasser have litigated many class actions on behalf of consumers and employees and tried many cases to a successful jury verdict.On the Web:www.baileyglasser.com