Institutional Investors Receive $141 Million Jury Verdict Against Bank of America

Late Thursday, a federal jury in the SDNY returned a verdict finding Bank of America liable in the amount of $141 million in a securities fraud trial that centered on the sales of certain asset-backed securities in 1998.

Bank of America must pay $141 million ($101 million plus interest) to a dozen institutional plaintiffs, including AIG, Allstate, Société Générale, Travelers, Bank Leumi, Bayerische Landesbank and the International Finance Corporation.

The NY Times reports that

the investors, led by A.I.G., sued Bank of America in 2003, accusing it of fraud and deceit in connection with its 1998 sale of $648 million in securities offered by the furniture company Heilig-Meyers, at the time a darling of Wall Street. The plaintiffs bought more than $300 million of the securities, which lost nearly all of their value when Heilig-Meyers went bankrupt in 2002.

The plaintiffs had argued that Bank of America failed to disclose to the investors that Heilig-Meyers kept two sets of accounting books and that the company distorted the loss and delinquency statistics supporting the consumer payments that backed the securities.

Read the NY Times article

1 Comment

  • Savings Expert
    Posted January 22, 2010, 5:07 am 5:07 am 0Likes

    This hard surprises me in the financial world we live in. I think this again boils down to the bonus based culture that the banks directors live in. Im wondering how many of the directors at the Bank of America benefitted from 6 figure bonuses due to the sale of Heilig-Meyers? The financial world has gone mad.

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