Bank of America said it will pay $2.43 billion to settle a class action lawsuit with investors who held its securities at the time the company announced plans to acquire Merrill Lynch.
The company expects to incur total litigation expense of about $1.6 billion for the quarter ending September 30th.
The litigation expense and a UK tax charge are expected to hurt the bank’s third-quarter earnings by about 28 cents per share, the company said in a statement.
The bank will also institute certain corporate governance enhancements until January 1st, 2015, under the settlement.
Plaintiffs had alleged, among other claims, that Bank of America and certain of its officers made false or misleading statements about the financial health of Bank of America and Merrill Lynch.
Bank of America denied the allegations and said it was entering into this settlement to eliminate the uncertainty and expense related to a long drawn-out litigation.
The settlement has to be approved by the US district court for the Southern District of New York. Bank of America is scheduled to report third-quarter results on October 17th.
Shares of the company were down slightly before the bell. They closed at $8.97 on the New York Stock Exchange on Thursday. – (REUTERS)
