The two largest state public pension funds in the US – the California Public Employees’ Retirement Sysrtem (CalPERS) and the California State Teachers Retirement System (CalSTRS) – have filed a joint motion with the US District Court, Southern District of New York, to be designated lead plaintiff in class actions against Bank of America stemming from its merger with Merrill Lynch.
The class actions allege Bank of America management misstated or omitted important information regarding Merrill Lynch’s financial condition as Bank of America shareholders voted on the merger with Merrill Lynch. The omission of information caused the price to go down dramatically, they allege.
If appointed lead plaintiffs, the two funds, with combined assets of $287 billion, will represent the claims of injured Bank of America shareowners.
Chief executive of CalSTRS, Jack Ehnes, said despite the challenging economic times corporations should not be given a pass on their obligations to shareholders.
“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. We’ve taken this step to hold the board and its management responsible to their owners” he said.
CalPERS board president Rob Feckner said filing for lead plaintiff will enable lawsuits to be consolidated and managed effectively.
“Shareowners did not have complete or accurate information prior to approving the merger, and the failure of Bank of America to provide it sent the stock price down dramatically,”Â he added. “Compounding the harm to shareowners was the fact that bonuses were paid to Merrill executives early and were not disclosed to shareowners prior to the merger,”Â he said.