Merrill Lynch & Co., now owned by Bank of America Corp., has agreed to pay $75 million to settle a class action lawsuit by employees who lost money investing in Merrill stock through their retirement plans. The Plaintiffs filed suit against Merrill in November 2007, alleging violations of the Employee Retirement Income Security Act. The parties reached a settlement in February and in March a federal judge gave it preliminary approval.
The Plaintiffs alleged that Merrill offered its stock as a retirement plan option when it was “imprudent” to do so, given the company’s growing exposure to subprime mortgages and other toxic debt. According to the complaint, Merrill’s actions ran “directly counter” to the purpose of ERISA pension plans to provide funds for employees’ retirement. The class period covers September 30, 2006 through December 31, 2008. Merrill shares lost more than 80% of their value over that time, according to Merrill’s website. Bank of America acquired Merrill on January 1, 2009. Merrill posted a $15.84 billion loss in the fourth quarter. A July 27th hearing has been set for final court approval of the settlement.
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