Class Action Lawsuit Filed Against Bank of America (NYSE: BAC) Over Securities

Claiming some major facts were omitted from the Registration Statement and Prospectuses for several securities issued by Bank of America (NYSE: BAC) in 2008, a class action lawsuit has been initiated for those that acquired those securities during that time.

The specific securities named in the lawsuit are Fixed to Floating Rate Non-Cumulative Preferred Stock Series K (“Series K Securities”); shares of the BofA 7.25% Non-Cumulative Perpetual Convertible Stock (“Series L Securities”); or shares of the BofA 8.20% Non-Cumulative Preferred Stock, Series H (“Series H Securities”).

The Series K offering was consummated close to January 25, 2008; the seris L offering was consummated near January 28; and the Series H offering on May 20, 2008.

In a press release, law firms representing the plaintiffs revealed four alleged facts that were kept from investors in the securities, which resulted in the class action: (a) The Company’s loans, leases, CDOs, and commercial mortgages backed securities were impaired to a far greater extent than disclosed, (b) Defendants failed to properly record losses for impaired assets, (c) The Company’s internal controls were inadequate to prevent the Company from improperly reporting its impaired assets, and (d) The Company’s capital base was inadequate relative to the magnitude of impaired assets.

According to the lawsuit, the Bank of America and some of its ‘officers, directors, underwriters and auditors’ didn’t adhere to the Securities Act of 1933.

Altogether Bank of America raised over $18.5 billion through the three offerings, and the plaintiff in Montgomery v Bank of America is seeking to recover damages for anyone who had invested in the securities in relationship to the Registration Statement and Prospectuses issued in regard to those securities.

With other class action lawsuits having already been initiated toward the banking and financial industry, we’re probably just at the beginning of even more lawsuits like this being brought as angry shareholders and others attempt to punish the banks for their performance, decisions and in some cases – shady dealings.