Recently, a U.S. District judge in Manhattan has dismissed a
lawsuit filed against Merrill Lynch - acquired by
Bank of America Corporation
) in 2009. The lawsuit was filed by South Korea-based Woori Bank,
a unit of
Woori Finance Holdings Co. Ltd.
) in May 2012.
The case against BofA was rescinded as it failed to meet the
3-year deadline of filing the lawsuit after incurring the losses
under the South Korean law. The District judge rejected the plea
even after Woori argued that the 3-year time period began
following the publication of a report by the U.S. Financial
Crisis Inquiry Commission on Jan 27, 2011.
The lawsuit accused Merrill of creating and selling 7
collateralized debt obligations (CDOs) that were made up of
residential mortgage-backed securities (RMBS) in 2005-2006.
Moreover, Woori alleged that Merrill issued misleading statements
and omissions related to these RMBS and had concealed the
associated risks. As a result, these provoked investments.
The lawsuit seeks damages worth $143 million along with other
Similar to the dismissal of the abovementioned lawsuit, another
legal charge made by Woori against
The Royal Bank of Scotland Group plc
) was also rejected by a U.S. District judge in Manhattan in Dec
2012. However, the reason for the dismissal was different in this
case. The judge found the supporting evidence furnished by Woori
to be weak, and hence the verdict was ruled in favor of Royal
Currently, Woori still has one lawsuit pending against
) over suspected losses on nearly $95 million worth of
mortgage-backed securities (MBS).
As for BofA, the lawsuit brought some relief. The company has
been facing a string of lawsuits and investigations pertaining to
various MBS sold by Merrill and also by Countrywide Financial - a
company acquired by BofA in 2008.
Currently, BofA retains a Zacks Rank #3 (Hold).
BANK OF AMER CP (BAC): Free Stock Analysis
CITIGROUP INC (C): Free Stock Analysis Report
ROYAL BK SC-ADR (RBS): Free Stock Analysis
WOORI FIN-ADR (WF): Free Stock Analysis
To read this article on Zacks.com click here.