The proposed settlement of a derivative suit before Judge Castel concerning Bank of America’s acquisitions of Countrywide and Merrill Lynch is being challenged by lawyers in a parallel case in Delaware state court. The parties to the federal case told Judge Castel on April 12 that they had settled. The next day, the Delaware lawyers filed a motion to enjoin the settlement, and Judge Castel signed an order to show cause that set a briefing schedule that will be complete by May 4. The motion papers were not (and still are not) available on ECF, but the grounds for the motion were made clear by a story in the New York Times: the Delaware lawyers contend the settlement amount of $20 million is grossly inadequate because it is a fraction of the $150 million SEC fine from the Merrill merger and because the bank’s insurance policy would result in the defendants paying nothing out of pocket. A Reuters story later provided additional background, including the unusual fact that two parallel derivative actions would proceed for so long without one case or the other being stayed.
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