Bank of America Corporation Merger Derivative Litigation
Ticker Symbol:
NYSE: BAC
Practice:
Securities Fraud & Shareholder Litigation
Phase:
Current
Chimicles & Tikellis LLP has filed a shareholder lawsuit, derivatively on behalf of Bank of America Corporation (“Bank of America” or the “Company”), in the Court of Chancery of the State of Delaware. The lawsuit alleges wrongdoing by several of Bank of America’s current and former directors for recklessly subjecting the Company to losses in connection with its acquisition of Merrill Lynch & Co., Inc. (“Merrill”) (the “Merger”).
On January 29, 2009, the Court appointed Chimicles & Tikellis LLP as Co-Lead Counsel in the action.
On September 15, 2008, Bank of America entered into a merger agreement to acquire Merrill, despite the fact that Merrill was heavily affected by the sub-prime mortgage crisis and the subsequent meltdown of many of the nation’s financial institutions. More specifically, Merrill faced significant problems with capital, liquidity and business results and a bankruptcy filing loomed as a significant possibility.
In order to complete the Merger, a vote by the Bank of America stockholders was necessary. On October 31, 2008, a proxy was issued by the Bank of America Board of Directors soliciting stockholder votes in favor of the Merger. The Bank of America stockholders approved the Merger on December 5, 2008.
The lawsuit alleges, however, that by the time of the December 2008 vote, the members of the Bank of America Board knew or should have known that Merrill had incurred billions of dollars in additional losses since the Merger had been agreed to in principle on September 15, 2008. The lawsuit further asserts that Bank of America was already discussing the predicament with government officials in mid-December. The litigation asserts as causes that the Bank of America Board failed to: (i) disclose this clearly material fact to Bank of America’s shareholders; (ii) attempt to renegotiate the Merger terms to provide increased protections for Bank of America and its shareholders; (iii) attempt to negotiate a lower price for Bank of America and its shareholders; and (iv) terminate or delay the Merger in light of the material adverse development in Merrill’s financial condition.
The lawsuit alleges that the Bank of America Board members acted disloyally and without care by failing to update Bank of America stockholders on the emerging and increasing problems with Merrill as those facts were discovered by the Board and by effecting the closing of the Merger based on the tainted stockholder vote without renegotiation in light of the new information about Merrill’s deteriorating financial condition. The lawsuit also alleges that these actions exposed the Company to liability for state and federal law violations, including causing it to be a target of investigations by the SEC and stockholder suits.
On October 12, 2009, ruling from the bench, the Court denied the Defendants’ motions to dismiss in their entirety and directed the parties to commence discovery. The parties are currently engaged in discovery.
To view a copy of the operative Verified Derivative Complaint, as filed, click here.
If you wish to discuss this Action further, have any questions concerning your rights or interests, or need additional information on this Action please contact:
| Attachment | Size |
|---|---|
| 4310 Complaint with Verification.pdf | 937.08 KB |
Attorneys to Contact:
Pamela S. Tikellis (PamelaTikellis@chimicles.com)
Robert J. Kriner, Jr. (RobertKriner@chimicles.com)
Tiffany J. Cramer (TiffanyCramer@chimicles.com)
A. Zachary Naylor (ZacharyNaylor@chimicles.com)
P.O. Box 1035, 222 Delaware Ave, Suite 1100, Wilmington, DE 19801 Phone: 302-656-2500