Merrill Lynch to Pay $315 Million to Settle Mortgage-Loans Lawsuit
Bank of America Corp.’s Merrill Lynch & Co. has agreed to pay $315 million to end a mortgage-securities lawsuit, in a preview of what could be a long line of settlements as investors step up efforts to recoup losses from the mortgage meltdown.
Bank of America has already set aside funds for the pact. Wells Fargo & Co. reached a similar pact earlier this year with a group of pension funds for $125 million.
The agreement rates as the largest known settlement of a securities class-action case brought by investors in mortgage-backed securities that aren’t government backed, said Jeff Nielson, a managing director at banking-industry consultant Navigant.
The case was brought by a variety of public retirement systems, including lead plaintiff Public Employees’ Retirement System of Mississippi.
Merrill didn’t admit to any wrongdoing in settling the lawsuit, which alleged that securities backed by pools of mortgages didn’t match up with sellers’ promises. The agreement will now go before U.S. District Court judge Jed Rakoff for approval. Mr. Rakoff rejected a $33 million settlement between Bank of America and the Securities and Exchange Commission proposed in 2009 before reluctantly approving a later $150 million agreement he called “half-baked justice at best.”