A verdict of $141 million was returned last month against Bank of America Corp., the largest U.S. consumer bank, in a lawsuit over claims that one of its units defrauded investors who bought securities backed by a furniture retailer. Federal court jurors in New York decided in favor of the investors, including American International Group Inc., Bank Leumi Le-Israel Ltd., Allstate Corp. and Societe Generale SA, in a trial that started in October. The jury awarded $85 million, which with interest, totals $141 million. The Plaintiffs showed the jury that Bank of America Securities knew the securities it was selling were much worse than they were holding them out to be to the marketplace.
The Bank of America unit, Nationsbanc, underwrote securities issued by a trust created by Heilig-Meyers, once the largest U.S. furniture retailer. The securities were backed by money owed to Heilig-Meyers from installment contracts. According to the Plaintiffs, Nationsbanc deceived investors when it claimed in offering materials that Heilig-Meyers’s collection practices were effective and its receivables sound. Richmond, Virginia-based Heilig-Meyers, which catered to low- and middle-income consumers, filed for bankruptcy in 2000 and wasn’t a Defendant in the case.
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