Bank of America Corporation Summary: According to a press release dated February 5, 2011, the complaint alleges that during the Class Period, defendants issued materially false and misleading statements regarding the Company’s business. Defendants concealed defects in the recording of mortgages and improprieties with respect to the preparation of foreclosure paperwork that harmed BofA’s investors when BofA had to temporarily discontinue foreclosures and admit to the problems it was experiencing. For much of the Class Period, defendants also concealed that BofA had previously engaged in a practice known as “dollar rolling,” wherein it omitted billions of dollars in debt from its balance sheet reported to the public. As a result of defendants’ false statements, BofA’s stock traded at artificially inflated prices during the Class Period, reaching a high of $19.48 per share on April 15, 2010.
Beginning in May 2010, BofA began disclosing aspects of its “repo-to-maturity” transactions (dollar rolling), claiming the transactions did not have a material impact on BofA’s balance sheet. Later, in October 2010, BofA announced a nationwide foreclosure halt pending a review of its foreclosure processes and whether there were irregularities with respect to its previously completed foreclosure activities. Then, on October 19, 2010, BofA announced its third quarter 2010 financial results, reporting a net loss of $7.3 billion and a diluted earnings per share loss of $0.77. BofA further reported receiving $18 billion in claims about faulty home loans that it may have to repurchase. On this news, BofA stock dropped $0.54 per share, to close at $11.80 per share on October 19, 2010 – a one-day decline of 5% and a nearly 42% decline from the stock’s Class Period high.
According to the complaint, the true facts, which were known by the defendants but concealed from the investing public during the Class Period, were as follows: (a) BofA did not have adequate personnel to process the huge numbers of foreclosed loans in its portfolio; (b) BofA had not properly recorded many of its mortgages when originated or acquired, which would severely complicate the foreclosure process if it became necessary; (c) defendants failed to maintain proper internal controls related to processing of foreclosures; (d) BofA’s failure to properly process both mortgages and foreclosures would impair the ability of BofA to dispose of bad loans; and (e) BofA had engaged in a practice known internally as “dollar rolling” to remove billions of dollars of debt from its balance sheet over the prior years.
On June 20, 2011, the Court released an order appointing the lead plaintiff and lead counsel.
On September 23, 2011, the plaintiffs filed a consolidated class action complaint.
On July 11, 2012, the Court issued an Order granting in part and denying in part Defendants' motions to dismiss. On August 13, 2012, plaintiffs filed their amended complaint. On August 28, 2012, the Court issued an Order denying defendant's motion for reconsideration.
SIC Code: 6021
Industry: Money Center Banks
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