BofA pays $2.4 billion to settle claims over Merrill
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Bank of America Corp (BofA) agreed on Friday to pay $2.43 billion to settle claims it hid crucial information from shareholders when it bought investment bank Merrill Lynch & Co at the height of the financial crisis.
The settlement, among the biggest of its kind to stem from the 2008 meltdown, underscores how BofA is still suffering from decisions it made during the crisis, even as competitors are moving on.
The second largest US bank likely lost money in the third quarter in large part because of the agreement, while other major banks, including JPMorgan Chase and Wells Fargo are expected to earn billions of dollars each.
As Lehman Brothers failed in September 2008, BofA agreed to buy Merrill Lynch. But in the weeks after that agreement, the bank tried unsuccessfully to scrap the deal. Merrill Lynch generated more than $15 billion of losses and its executives agreed to award employees up to $5.8 billion of bonuses.
BofA's shareholders voted to approve the deal in December 2008. After the merger, BofA shares fell sharply, and investors sued, saying Merrill's losses should have been disclosed before the vote.
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