Bank of America settles Merrill Lynch lawsuit

Bank of America recently agreed to settle claims with investors over mortgage-backed securities sold by the bank's Merrill Lynch unit. The settlement will cost the financial institution $315 million and is awaiting approval by a judge.

The New York Times reported the class action lawsuit was brought to the courts by the pension fund of the Public Employees' Retirement System of Mississippi, who claims they were misled into purchasing toxic mortgage-backed securities. The settlement is another step in the ongoing legal troubles Bank of America is facing with its mortgage unit. In the first half of 2011, Bank of America spent $12.7 billion in settlements over toxic securities.

According to Bloomberg, if the settlement is approved, the $315 million will be distributed to investors in the fund, who claim Merrill Lynch made inaccurate statements regarding the qualifications of mortgage-loan borrowers, property appraisals and debt-to-income ratios of applicants.

The New York Times reported Judge Raskoff has to approve the settlement, which does not include an admission of guilt from Bank of America. In 2009, Judge Raskoff rejected a similar settlement between the SEC and Bank of America, calling the agreement a breach of justice and morality.

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