(Updates with consolidation order in eighth paragraph.)
June 20 (Bloomberg) -- Bank of America Corp.’s Merrill Lynch unit must face a class-action suit on behalf of at least 1,800 investors over mortgage-backed securities, a federal judge ruled.
U.S. District Judge Jed S. Rakoff in Manhattan certified a class, or group, of all investors in the securities, which were sold from February 2006 through September 2007. Rakoff also granted the investors’ request to appoint New York-based Bernstein Litowitz Berger & Grossmann LLP as lead lawyers for the class.
“After careful consideration, and for reasons that will be stated in a forthcoming written opinion, the court hereby grants both motions,” Rakoff wrote in an order released June 16.
In the litigation, filed in 2008, the investors claim Merrill misled them in the offering documents for $16.5 billion of certificates. The investors claim the bank falsely claimed that the underlying mortgages complied with the stated underwriting guidelines.
The class certification allows the investors to combine their claims into a single suit rather than being forced to make them individually.
Bill Halldin, a spokesman for Charlotte, North Carolina- based Bank of America, declined to comment.
The named plaintiffs in the case include the Mississippi Public Employees’ Retirement System, the Los Angeles County Employees Retirement Association, the Wyoming state treasurer, the Connecticut Carpenters Pension Fund and the Connecticut Carpenters Annuity Fund.
In a separate case, U.S. District Judge William Pauley in Manhattan consolidated three cases claiming Bank of America concealed the risks of its mortgage-backed securities and that it failed to use appropriate controls in processing foreclosures. Pauley also named the Pennsylvania Public School Employees’ Retirement System as lead plaintiff.
The cases are Public Employees’ Retirement System of Mississippi v. Merrill Lynch & Co., 08-CV-10841; Pipefitters Local No. 636 Defined Benefit Plan, 11-CV-733, U.S. District Court, Southern District of New York (Manhattan).
--Editors: Fred Strasser, Steve Farr
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