Lawyers from Susman Godrey filed a class action lawsuit Thursday on behalf of shareholders against Bank of America and Merrill Lynch, claiming bank officers and directors made false and misleading statements leading up to a Dec. 5, 2008, vote on Bank of America's acquisition of Merrill Lynch.
The complaint, filed in the Federal District Court for the Southern District of New York, alleges Bank of America did not reveal Merrill Lynch's actual financial health at the time of the deal even though both companies knew or should have known of Merrill Lynch's large losses. The defendants concealed billions of dollars of fourth quarter losses from shareholders, according to the lawsuit.
"[Former Merrill Lynch CEO John] Thain reported that Merrill suffered significant losses in November, which Thain described as one of the worse months in Wall Street history. Despite the size of these losses, Thain told Merrill's board the losses were in line with BOA's estimates," says the complaint. "Neither BOA nor Merrill, nor any of the Individual Defendants, ever disclosed any such estimates... to their shareholders in the Proxy Statement. Likewise, no loss estimates were disclosed in any subsequent filings."
Thain resigned from Bank of America Thursday morning in reaction to last week's announcement of the losses, according to The Wall Street Journal.