Jonathan Stempel, Reuters

A federal judge refused to dismiss a lawsuit accusing Bank of America Corp of misleading shareholders about its exposure to risky mortgage securities and its dependence on an electronic mortgage registry known as MERS.

U.S. District Judge William Pauley in Manhattan said shareholders led by a Pennsylvania school pension fund may pursue securities fraud claims against the second-largest U.S. bank to recover billions of dollars of alleged losses.

Pauley said the allegations raised a “strong inference” that Bank of America intended to mislead about its reliance on the registry, vulnerability to mortgage buyback claims, internal controls and compliance with accounting and securities rules.

But the judge dismissed a variety of claims against current and former Bank of America executives and directors, including current Chief Executive Brian Moynihan and his predecessor, Kenneth Lewis, and dozens of underwriters.

Bank of America spokesman Lawrence Grayson declined to comment. Mark Rosen, a lawyer for lead plaintiff Pennsylvania Public School Employees’ Retirement System, did not immediately respond to a request for comment.

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