01 Apr 2009, David Benyon, Operational Risk & Regulation
NEW YORK - The California Public Employees' Retirement System (Calpers) and the California State Teachers Retirement System (Calstrs) have filed for lead plaintiff status in a New York class-action lawsuit against Bank of America (BoA). The two funds are the largest US state pension funds; holding assets of $173 billion and $114 billion respectively. The legal challenge alleges BoA executives failed to disclose crucial information on the bank's deal to buy stricken investment bank and brokerage Merrill Lynch. Merrill went on to announce $15 billion of fourth-quarter losses within weeks of its sale and BoA has so far received $45 billion in federal bail-out funds.
Calpers and Calstrs join five pension funds that initially applied for lead plaintiff status after losing a combined $274 million between July 21, 2008 and Jan 20. The first round of plaintiffs include the Texas and Ohio state teaching pensions; Ohio's general state fund for public employees; a Netherlands fund representing the Dutch healthcare and social sector; and a large Swedish national pension fund.
The plaintiffs allege proxy statements published before the conclusion of the troubled acquisition failed to disclose Merrill's true financial condition and that BoA failed to conduct adequate research into the deal.