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(Updates with court papers in third paragraph.)
Dec. 6 (Bloomberg) -- Bank of America Corp. reached a $315 million settlement with class action plaintiffs who sued its Merrill Lynch unit over claims tied to mortgage-backed securities, according to a filing in Manhattan federal court.
Merrill Lynch was sued beginning in December 2008 by asset- backed certificate holders for alleged “false and misleading” prospectus statements related to $85 billion in securities, according to a brief filed yesterday with the court.
The plaintiffs said inaccurate statements were made about qualifications of mortgage-loan borrowers, property appraisals, and debt-to-income ratios of applicants, and “the registration statement materially misrepresented the credit quality of the mortgage loans underlying the certificates.”
The $315 million will be distributed to certificate holders who submit valid claim forms, plaintiffs’ lawyers said in court papers.
Merrill Lynch contended losses experienced by investors were the result of “the overall economic downturn, housing price declines and reduced liquidity,” according to settlement papers.
Investors’ attorneys requested that a final hearing to approve the settlement be scheduled for March 21.
The lead case is Public Employees’ Retirement System of Mississippi, et al., v. Merrill Lynch & Co., 08CV10841, U.S. District Court, Southern District of New York (Manhattan).
--Editors: Mary Romano, Glenn Holdcraft
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