Bank of America Corp. shareholders are challenging the company's acquisition of Merrill Lynch & Co. in lawsuits filed in New York and Georgia, alleging they weren't told the truth about Merrill's financial condition.
A case filed Thursday in the Southern District of New York lists employee retirement funds in Fort Worth, Texas, and Miami as plaintiffs. The case seeks class-action status on behalf of Bank of America shareholders who were eligible to vote for the deal in December and those who purchased shares between Jan. 2 and Jan. 20.
Court documents said there are nearly 260,000 shareholders of common stock and 30 holders of class B shares.
The company, its chief executive Kenneth Lewis and former Merrill Lynch CEO John Thain are listed as defendants.
The case alleges that proxy statements distributed before the acquisition did not accurately disclose Merrill's financial condition and the risks, and that Bank of America had failed to conduct adequate research into the deal. It also says Bank of America directors didn't have a reasonable basis for recommending the deal.
The lawsuit alleges that a Jan. 1 press release about the acquisition was false and misleading in that it failed to reveal that Merrill Lynch's financial condition was so bad that Bank of America had considered withdrawing from the deal before closing. It says Bank of America proceeded only because the federal government promised to help absorb the losses through a purchase of additional Bank of America securities, which dilutes shareholder value.
Bank of America spokeswoman Shirley Norton said the company had not yet been served and since executives haven't seen the lawsuits, they couldn't comment