BofA board's $20 million settlement called inadequate

Bank of America Corp directors, who were taken to court by shareholders for allegedly paying too much for Merrill Lynch & Co in 2008, would have to defend a proposed $20 million settlement of the claims in a federal court in New York, according to court papers.

Terming the settlement "grossly inadequate," lawyers in a similar case in Delaware have asked P Kevin Castel, the judge hearing the New York matter, to order the parties agreeing to the deal to justify its terms.

The parties have been directed by Castel to submit necessary documents by 4 May.

The Delaware plaintiffs, the New York Times first reported, had objected to the settlement in New York as inadequate.
The paper further said, according to the plaintiffs in the case being argued in the Delaware Chancery Court, damages in the case could touch $5 billion.

According to lawyers in the Delaware case, if the settlement in New York were approved, their clients would see their damages claims wiped out ahead of a scheduled October trial, the newspaper reported.

Court papers have it that the settlement was struck on 12 April by lawyers representing two public employee pension funds that had sued the directors of Bank of America for failure to perform their fiduciary duty, the Louisiana Municipal Police Employees' Retirement System and the Hollywood Police Officers' Retirement System in Florida.