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Mortgage Lawsuits News | Mortgage Litigation Index
Mortgage industry lawsuit news and mortgage litigation coverage. Stories about legal settlements, judgments and mortgage class actions.

BoA Target of 2 Investor Lawsuits

Recent mortgage-related investor litigation activity

Feb. 9, 2010


Recent investor litigation was dominated by two cases against Bank of America Corp., though Citigroup Inc. is being targeted by a Texas law firm.

On Feb. 4, New York Attorney General Andrew M. Cuomo filed a lawsuit in New York's supreme court against Bank of America Corp., former chief executive officer Kenneth D. Lewis and current Chief Financial Officer Joseph L. Price, according to a copy of the complaint.

Cuomo claims the defendants deceived shareholders by failing to disclose $16 billion in losses at Merrill Lynch prior to its yearend 2008 acquisition of the investment banker. He also alleges that the federal government was manipulated with false claims that the company would back out of the acquisition without $20 billion in Troubled Asset Relief Program funds.

Lewis allegedly overstated additional losses to regulators.

Price reportedly ignored a warning from the company's corporate treasurer just before the shareholder vote that "I didn't want to be talking [about Merrill's losses] through a glass wall over a telephone." The statement highlighted how BoA hid $3.57 billion in Merrill bonus payments from its shareholders. It also noted that the bank misled Timothy Mayopoulos, the bank's corporate counsel, about the massive losses and "summarily terminated" him when he confronted Price.

Cuomo and other government officials blasted the bank in the announcement, noting that the merger was an "example of how the actions of our nation's largest financial institutions led to the near-collapse of our financial system" and calling TARP investments "an important part of the history of the financial crisis."

BoA is also facing a class action filed on behalf of investors of its securities in U.S. District Court for the Southern District of New York, Finkelstein & Krinsk LLP said in a recent news release. The Charlotte, N.C.-based bank and some of its officers, directors, underwriters and auditors allegedly violated the Securities Act of 1933 by misleading investors about its asset impairments and losses.

Houston-based Shepherd Smith Edwards & Kantas LLP said in a Jan. 26 statement that it is investigating investor claims of losses. The law firm alleges that firms like Citigroup Inc. and Morgan Stanley pushed investors into preferred securities of companies like Fannie Mae and Freddie Mac even as they were either involved in the underwriting or marketing of those products.

The People of the State of New York by Andrew M Cuomo, Attorney General of the State of New York, Plaintiff, against Bank of America Corporation, Kenneth D. Lewis and Joseph L. Price, Defendants.
Feb. 4, 2010 (Supreme Court of the State of New York County of New York).

Montgomery v Bank of America Corporation, et. al.
(U.S. District Court for the Southern District of New York).

Sam Garcia worked in mortgage lending for twenty years prior to becoming publisher of in 2000.

[email protected]

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