The 2nd US Circuit Court of Appeals ruled that the bank, CEO Brian Moynihan and other executives had not intended to mislead shareholders or acted in a “highly unreasonable” manner by not disclosing the lawsuit before it was filed, Reuters reported.
The $10 billion suit was filed in August of 2011 by AIG over losses of more than $28 billion in mortgage-backed securities the insurer had purchased from Bank of America and its Merrill Lynch and Countrywide units. The lender’s shares plummeted 20.3% the day the lawsuit was filed, Reuters reported.
Investment firm Camcorp Interests Ltd. Took the bank to court over the matter, claiming BOA knew of AIG’s claims as early as February of 2011 and should have revealed them then.
But the appeals court found today that “the much more compelling conclusion” was that the bank wasn’t required to disclose the suit because of “information already in the marketplace” and “the lack of any definitive regulatory requirement requiring the disclosure of a possible lawsuit of an indeterminate amount.”
Bank of America won’t have to pay a dime for allegedly concealing from its shareholders a multibillion-dollar lawsuit that led to a 20% one-day plunge in the bank’s stocks, a federal judge said today.