Overview
As we reported before, there were two parallel derivative suits against Bank of America directors concerning its merger with Merrill Lynch, one in the Southern District and another in Delaware. The plaintiffs in the Southern District case agreed to a $20 million settlement, which the Delaware plaintiffs, whose case would effectively end, unsuccessfully sought to enjoin. Judge Castel ruled their complaints could be heard at the objection stage. Today, the Delaware plaintiffs objected, arguing that $20 million is inadequate in comparison to the $500 million in insurance available and the $2.43 billion Bank of America agreed to pay in a related class action. The Delaware plaintiffs contend that the settlement resulted from an unfair “reverse auction” in which the defendants were able to bid the Southern District and Delaware plaintiffs against one another. Based on a declaration from NYU Law professor Geoffrey Miller, the Delaware plaintiffs claim the settlement's corporate governance reforms add little to the directors’ preexisting fiduciary duties. For their part, the settling parties contend that the settlement was the result of arm’s length negotiations and was fair in light of the risks of the case. Their briefs are here (from the Southern District plaintiffs) and here (from the defendants).
