BofA sat on knowledge of AIG lawsuit for 7 months
The seemingly endless saga of companies suing Bank of America Corp. (BofA) over losses related to mortgage-backed securities took another turn yesterday as reports surfaced that the bank knew as early as January that American International Group Inc. (AIG) intended to sue the company for $10 billiona full seven months...
August 31, 2011 at 07:56 AM
2 minute read
The original version of this story was published on Law.com
The seemingly endless saga of companies suing Bank of America Corp. (BofA) over losses related to mortgage-backed securities took another turn yesterday as reports surfaced that the bank knew as early as January that American International Group Inc. (AIG) intended to sue the company for $10 billion—a full seven months before the suit was filed.
Earlier this month, AIG finally filed the lawsuit against BofA, alleging the bank and its subsidiaries, Countrywide and Merrill Lynch, misrepresented the quality of mortgages it sold to investors. As a result, AIG said it lost $28 billion in investments.
Despite BofA's top lawyers supposed knowledge of the lawsuit, Reuters reports that the bank chose to remain mum on the threat in its quarterly regulatory filing to the Securities and Exchange Commission, which it submitted just four days before AIG filed the suit. Additionally, BofA management chose not to discuss the pending litigation on conference calls about the company's quarterly results and the other legal claims currently afflicting the bank.
Separate from the AIG situation, BofA did receive some good legal news yesterday. The bank won a dismissal of claims by BNP Paribas Mortgage Corp. and Deutsche Bank AG over more millions lost on asset-backed securities.
A district court judge had previously dismissed earlier contract claims in March but tossed the conversion suits entirely yesterday. BNP Paribas and Deutsche Bank now have 30 days to file new complaints.
For further analysis on whether BofA should have disclosed the pending litigation, read Reuters' coverage.
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