PfZW and AP4 sue BoA over Merrill disclosure
GLOBAL - Dutch industry-wide pension fund Stichting Pensioenfonds Zorg en Welzijn (PfZW) has teamed up with four other schemes, including Sweden's fourth buffer fund, AP4, to sue Bank of America for compensation over apparent non-disclosures relating to the purchase of Merrill Lynch.
A joint statement issued by PfZW, AP4, along with the US' Ohio Teachers, Ohio PERS and Texas Teachers pension funds said the five are working together to seek lead plaintiff status in a class action over "untrue statements" and material information disclosure around the acquisition of Merrill in December.
More specifically, the funds allege Bank of America executives had material information which would have raised "serious reservations" about the takeover deal "but did not disclose this information to shareholders", according to Ohio attorney general Richard Cordray.
The event in question relates to a $10bn new offering of Bank of America which was approved by shareholders on 5 December 2008, but which investors now say was "inflated" because material facts about the funding status of Merrill Lynch were not disclosed.
Weeks after the takeover of Merrill Lynch was completed, the firm then revealed ML had lost $15bn (€11bn) in Q4 2008 and Bank of America executives "had secretly demanded billions of dollars in government assistance to complete the deal", said the five funds.
BoA's stock price has plummeted over 80% since the merger was announced and the five funds have between them lost over $274m between 21 July 2008 and 20 January 2009.
"The Dutch pension fund Stichting Pensioenfonds Zorg en Welzijn suffered significant losses because of the alleged misrepresentation and non-disclosure of the relevant facts by Bank of America with respect to its and Merrill Lynch's financial condition,:" said Johan van der Ende, chief investment officer at PGGM Investments - the asset managers responsible for looking after PfZW's assets.
"Apart from this, we believe we have a duty to represent global investors' interests by striving for adequate loss recovery for all shareholders and essential corporate governance restructuring of this company," added van der Ende.
The case has been filed with the Southern District of New York US District Court - where many securities class actions are filed - as Sklar v Bank of America Corp no 09-CIV - 0580, and is presided by Judge Chin.
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