Bank of America (BAC) agreed to a $2.43 billion settlement with investors who suffered losses after the lender purchased Merrill Lynch.
The bank will incur a third-quarter litigation expense of about $1.6 billion, the Charlotte, North Carolina-based company said today in a statement. Earnings also will be reduced by $1.9 billion in pretax valuation adjustments related to the company's credit spreads and a previously disclosed $800 million expense tied to U.K. taxes, it said.
Bank of America has faced regulatory probes, investor lawsuits and criticism from lawmakers after buying Merrill on Jan. 1, 2009 in a deal that boosted costs amid U.S. bailout efforts. As part of the settlement announced today, the bank promised to overhaul corporate-governance policies.
"Resolving this litigation removes uncertainty and risk and is in the best interests of our shareholders," Chief Executive Officer Brian Moynihan said in the statement. "As we work to put these long-standing issues behind us, our primary focus is on the future and serving our customers and clients."
Bank of America slipped (BAC) 7 cents to $8.90 in early trading at 8:51 a.m. in New York. The bank advanced 61 percent this year through yesterday, the biggest gain in the Dow Jones Industrial Average.
Moynihan, 52, has been working to resolve legal disputes tied to practices under his predecessor, Kenneth D. Lewis. Moynihan last year hired Gary Lynch, the former head of enforcement at the U.S. Securities and Exchange Commission, to help resolve clashes including confrontations with investors who suffered losses investing in mortgage-backed securities.
