March 24 (Bloomberg) -- The California Public Employees’ Retirement System, the biggest U.S. pension fund, asked to lead investor lawsuits over the acquisition of Merrill Lynch & Co. by Bank of America Corp.
Calpers, as the fund is known, and the California State Teachers Retirement System, the second-largest U.S. fund, filed a joint request yesterday in federal court in Manhattan to be named lead plaintiffs, according to a joint statement.
Investors in the class-action, or group, lawsuits allege Bank of America management misled investors about Merrill Lynch’s financial condition as shareholders voted on the merger. The California pension funds lost $264 million because of allegedly false and misleading statements by Bank of America, according to yesterday’s filing.
“By moving to be appointed lead plaintiffs, we’re acting to supplement government enforcement of securities laws at a critical time for our nation’s economy,” Jack Ehnes, chief executive officer of the teachers fund, said in the statement. “We’ve taken this step to hold the board and its management responsible to their owners.”
Plaintiffs that have sustained the biggest losses are often selected by the judge overseeing group lawsuits to represent other shareholders and manage and coordinate a single, consolidated case.
Bank Losses
Bank of America agreed in September to buy Merrill Lynch on the same weekend that Lehman Brothers Holdings Inc. failed. Bank of America reported a $1.79 billion loss in the fourth quarter because of loans tied to housing and credit cards and writedowns of securities backed by subprime mortgages. Merrill had a $15.8 billion loss in the quarter, its last as an independent company.
Shirley Norton, a Bank of America spokeswoman, didn’t immediately return a voice-mail seeking comment after regular business hours yesterday.
With 19 million shares, Calpers is Bank of America’s 31st largest shareholder, according to Bloomberg data.
Calpers Board President Rob Feckner said shareholders didn’t have accurate information before approving the merger.
“Compounding the harm to shareholders was the fact that bonuses were paid to Merrill executives early and were not disclosed to shareholders prior to the merger,” Feckner said in the funds’ statement.
Lawyer Search
The pension funds are conducting a formal process to select lawyers to represent them, they said yesterday in a court filing by the law firm Girard Gibbs LLP. The funds will make their selection by March 31, according to the filing.
At least eight shareholder lawsuits have been filed against Bank of America in federal court in Manhattan seeking to represent investors who held the bank’s stock.
A request to be named lead plaintiff was also filed by the West Palm Beach Police Pension Fund, Firemen’s and Policemen’s Pension and Relief Fund of the City of Tuscaloosa and the Westmoreland County Employee Retirement System. Those funds are represented by Scott & Scott LLP in New York.
The case is Sklar v Bank of America, 09-00580, U.S. District Court, Southern District of New York (Manhattan).
To contact the reporter about this story: Karen Gullo in San Francisco at kgullo@bloomberg.net.
Last Updated: March 24, 2009 00:01 EDT
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