Court Dismisses BofA Stock Drop Case

 A federal judge has tossed out a stock drop case against Bank of America (BofA) that had alleged numerous fiduciary breaches in connection with BofA’s Merrill Lynch and Countrywide Financial acquisitions.

U.S. District Judge P. Kevin Castel of the U.S. District Court for the Southern District of New York accepted a defense request to dismiss the consolidated case that had alleged bank officials continued to offer company stock as a retirement plan option when it was no longer prudent. Other than the Benefits Committee, the plaintiffs didn’t prove defendants were, in fact, fiduciaries, nor did they show that the Benefits Committee acted imprudently, Castel found.

Castel also rejected allegations the BofA officials didn’t adequately disclose to participants BofA’s true financial picture and likewise failed in their obligations under the Employee Retirement Income Security Act (ERISA) to monitor certain other fiduciaries and to act in a loyal manner toward participants’ interests.

The court held that statements made about the company’s financial picture in Securities and Exchange Commission (SEC) documents were not fiduciary statements simply because participants received them.   Quoting a 1996 U.S. Supreme Court case, Castel asserted that a company acts in a fiduciary capacity under ERISA when it “intentionally connect[s]. . . statements about [its] financial health to statements it ma[kes] about the future of benefits, so that its intended communications about the security of benefits [are] rendered materially misleading.”

BofA was hit was numerous suits in the wake of the Merrill Lynch and Countrywide deals including a number alleging participants were hurt when the bank’s shares declined in value (See Stock Drop Suit Hits BoA over Countrywide, Merrill Deals).

Castel’s stock drop ruling is here