Merrill Lynch Settles Fraud Suit for $475 Million
Merrill Lynch & Co. has agreed to pay $475 million to settle a class-action lawsuit by the Ohio State Teachers Retirement System alleging securities fraud on the part of the financial services company.
The Ohio pension system sued in May after Merrill Lynch's stock fell when the company wrote down the value of billions of dollars in assets tied to subprime mortgages. The suit alleged company executives had artificially boosted the stock price with misleading statements to investors ahead of the devaluation.
Investors who bought common or preferred shares in the New York-based company between Oct. 17, 2006 and Dec. 31, 2008 are eligible to be in the class.
"We're still learning how far-reaching the fallout from the meltdown of subprime mortgages will be, but one thing is clear -- many Ohioans saw the value of their retirement savings take a nose-dive as a result of improper practices on the part of the financial giants," new Ohio Attorney General Richard Cordray said in a statement. "I'm encouraged that a portion of those losses will be restored through this proposed settlement, and it's fitting that our state and STRS Ohio would take the lead to ensure that alleged manipulation and misleading statements will not be tolerated."
The settlement still must be approved by a judge in U.S. District Court in New York, where the lawsuit was filed.
Merrill Lynch was bought by Charlotte, North Carolina-based Bank of America Corp. for $19.4 billion in a deal that closed on New Year's Eve.