Bank of America Corporation Securities Litigation Frequently Asked Questions
Frequently Asked Questions about the Bank of America Corporation Securities Litigation
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In the Consolidated Class Action Complaint dated September 23, 2011 (the “Complaint”) and in the Amended Consolidated Class Action Complaint dated August 13, 2012 (the “Amended Complaint”), Lead Plaintiff, the Pennsylvania Public School Employees’ Retirement System, or PSERS, alleged that Defendants violated Sections 11, 12(a)(2), and 15 of the Securities Act of 1933 (the “Securities Act”) and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) by misrepresenting and concealing the magnitude of the Company’s potential exposure to demands to repurchase mortgage-backed securities and other mortgage loans that had been sold by BoA and Countrywide Financial Corporation, and the risks to BoA arising from its use of and reliance upon a national electronic database that tracks changes in mortgage servicing rights and beneficial ownership interests in loans secured by residential real estate called MERS.
On January 11, 2012, Defendants moved to dismiss the Complaint. After briefing and oral argument, on July 11, 2012, the Court issued a Memorandum and Order granting in part and denying in part Defendants’ motions to dismiss. The Court’s July 11, 2012 Order granted the motion to dismiss, with prejudice, on all claims under the Securities Act, and granted, without prejudice, the Executive Defendants’ motions to dismiss the claims under Section 10(b) of the Exchange Act and SEC Rule 10b-5 (“Exchange Act claims”), while denying BoA’s motion to dismiss the Exchange Act claims.
On July 25, 2012, BoA moved for reconsideration of the Court’s July 11, 2012 Order to the extent it sustained Lead Plaintiff’s Exchange Act claims or, in the alternative, to certify the Court’s decision for interlocutory review, pursuant to 28 U.S.C. § 1292(b). On August 13, 2012, Lead Plaintiff filed its opposition to the reconsideration motion and also filed its Amended Complaint. On August 23, 2012, BoA filed its reply and on August 28, 2012, the Court denied BoA's motion for reconsideration or for certification for interlocutory review.
On November 21, 2012, BoA filed its answer to the Amended Complaint.
On November 5, 2012, the Executive Defendants moved to dismiss the Amended Complaint. Following briefing and oral argument, the Court denied in part the Executive Defendants’ motion to dismiss the Amended Complaint on April 17, 2013.
On May 1, 2013, Defendant Brian T. Moynihan moved for partial reconsideration of the Court’s Order denying the Executive Defendants’ motion to dismiss the Amended Complaint. After briefing, the Court denied Mr. Moynihan’s motion for reconsideration on June 12, 2013.
On June 17, 2013 the Executive Defendants filed their answers to the Amended Complaint, denying the claims and asserting a number of affirmative defenses.
Fact discovery in the Action commenced in May, 2013. The Parties produced more than 8 million pages of documents and conducted more than 30 fact depositions.
On November 15, 2013, Lead Plaintiff filed its motion for class certification. On February 14, 2014, the Court approved the parties’ Stipulation to the certification pursuant to Federal Rule of Civil Procedure 23(a) and 23(b)(3), of the proposed class, consisting of a class of all persons or entities who purchased or otherwise acquired either BoA’s common stock or Common Equivalent Securities during the Class Period of February 27, 2009 through October 19, 2010, and who suffered damages as a result (the “Class”). Excluded from the Class are: (i) Defendants ; (ii) members of the immediate family of each of the Executive Defendants; (iii) any person who was an executive officer and/or director of BoA during the Class Period; (iv) any entity that served as an underwriter for BoA’s offering of Common Equivalent Securities; (v) any person, firm, trust, corporation, officer, director, or any other individual or entity in which any Defendant has a controlling interest or that is affiliated with any of the Defendants; and (vi) the legal representatives, agents, affiliates, heirs, successors-in-interest or assigns of any such excluded party. For the sake of clarity, Lead Plaintiff and Defendants agree that the exclusions from the Class do not include Investment Vehicles. The Court also named PSERS as the Class Representative, and appointed PSERS’s counsel, Barrack, Rodos & Bacine, as Lead Counsel under Federal Rule of Civil Procedure 23(g), all subject to the parties’ reservation of their rights to move to alter or amend the Court’s Order certifying the Class pending final judgment in this action pursuant to Federal Rule of Civil Procedure 23(c)(1)(C).
In April 2014, Lead Plaintiff and BoA agreed to a mediation of the Action before the Honorable Layn R. Phillips, a former federal district court judge. Before the mediation, Lead Plaintiff and BoA submitted several detailed mediation statements to Judge Phillips. On October 2, 2014, Judge Phillips conducted a mediation session in New York City attended by representatives of Lead Plaintiff, BoA and their respective counsel. This mediation did not resolve the Action. Another mediation before Judge Phillips was held on February 27, 2015. Lead Plaintiff and BoA provided additional written submissions to Judge Phillips before the February 2015 mediation, which also did not resolve the Action. A third mediation session was held before Judge Phillips on August 12, 2015, after additional submissions by the parties.
At the conclusion of the mediation session on August 12, 2015, counsel for BoA and Lead Counsel, on behalf of their respective clients, accepted a proposal from Judge Phillips to settle and release all claims asserted in the Action in return for a cash payment by or on behalf of BoA of $335,000,000 for the benefit of the Class, subject to the execution of a stipulation and agreement of settlement and related papers, and approval of the proposed settlement by the Court. In Judge Phillips’ opinion, “the proposed Settlement is the result of vigorous arm’s-length negotiation by all involved Parties. I believe, based on my extensive discussions with the Parties and the information made available to me both before and during the mediation, that the Settlement was negotiated in good faith and that the Settlement is fair and reasonable.”
The Settling Parties entered into the Stipulation and Agreement of Settlement, as amended (the “Stipulation”) on March 11, 2016. On June 15, 2016, the Court preliminarily approved the Settlement, authorized the Notice to be sent to potential Class Members, and scheduled the Settlement Hearing to consider whether to grant final approval to the Settlement.
Even though the parties have reached a settlement, the Defendants deny the claims and contentions alleged by Lead Plaintiff in this Action, deny any liability whatsoever, and maintain that they have meritorious defenses to all claims that were raised or could have been raised in the Action.
The Court has issued an Order, that everyone who fits the following description, and is not excluded by definition from the Class (see Question [6] below) or chooses to exclude themselves (see Question [12] below), is a “Class Member”:
All Persons who purchased or otherwise acquired either BoA’s common stock or Common Equivalent Securities during the Class Period of February 27, 2009 through October 19, 2010, and who suffered damages as a result (the “Class”). Excluded from the Class are: (i) Defendants ; (ii) members of the immediate family of each of the Executive Defendants; (iii) any person who was an executive officer and/or director of BoA during the Class Period; (iv) any entity that served as an underwriter for BoA’s offering of Common Equivalent Securities; (v) any person, firm, trust, corporation, officer, director, or any other individual or entity in which any defendant has a controlling interest or that is affiliated with any of the Defendants; (vi) the legal representatives, agents, affiliates, heirs, successors-in-interest or assigns of any such excluded party; and (vii) any Person that would otherwise be a Class Member, but properly excludes himself, herself, or itself by submitting a valid and timely request for exclusion from the Class in accordance with the requirements set forth herein and in the Notice.
Lead Plaintiff and Defendants have agreed that mutual funds, ETFs, fund of funds, hedge funds, and other investment vehicles associated with a Defendant or any employee benefit plan for which a Defendant acts as an advisor or fiduciary are not excluded from the Class.
Receipt of a Notice does not mean that you are a Class Member. Please check your records or contact your broker to see if you purchased or otherwise acquired BoA common stock or BoA Common Equivalent Securities during the Class Period and suffered a loss as a result of any such purchase or purchases, as described above.The Court has not decided the Action in favor of either Lead Plaintiff or Defendants, although it did dismiss certain claims against Defendants when it ruled on Defendants’ various motions to dismiss. The Settlement will end all the claims against Defendants in the Action and avoid the uncertainties and costs of further litigation and any future trial. Assuming the Settlement, as amended, is approved, affected investors may become eligible to receive compensation once the claims made against the Net Settlement Fund are validated, calculated and presented to the Court for payment, rather than after the time it would take to resolve future motions for class certification and summary judgment, conduct additional expert discovery, have a trial and exhaust all appeals.
The Settlement was reached after more than four years of intensive litigation. As described in Question 1, Lead Plaintiff, through Lead Counsel, conducted an extensive investigation of the claims and underlying events and transactions relating to the Action, reviewed more than 8 million pages of documents produced by the Parties, and took or defended depositions of more than 30 fact witnesses. Lead Plaintiff and Lead Counsel also participated in protracted arm’s-length negotiations and mediations before an experienced mediator before entering into the Settlement.
Defendants deny all allegations of liability contained in the Complaint and deny that they are liable to the Class. The Settlement, as amended, is not an admission or concession on the part of Defendants regarding the truth or validity of the allegations, claims, and/or defenses in the Action, or their fault or liability for alleged damages by any member of the Class.
There are some people who are excluded from the Class by definition. Excluded from the Class are: (i) BoA and the Executive Defendants; (ii) members of the immediate family of each of the Executive Defendants; (iii) any person who was an executive officer and/or director of BoA during the Class Period; (iv) any entity that served as an underwriter for BoA’s offering of Common Equivalent Securities; (v) any person, firm, trust, corporation, officer, director, or any other individual or entity in which any Defendant has a controlling interest or that is affiliated with any of the Defendants (vi) the legal representatives, agents, affiliates, heirs, successors-in-interest or assigns of any such excluded party; and (vii) any Person that would otherwise be a Class Member, but properly excludes himself, herself, or itself by submitting a valid and timely request for exclusion from the Class in accordance with the requirements set forth herein and in the Preliminary Order. Lead Plaintiff and Defendants have agreed that mutual funds, ETFs, fund of funds, hedge funds, and other investment vehicles associated with a Defendant or any employee benefit plan for which a Defendant acts as an advisor or fiduciary are not excluded from the Class.
You are a Class Member only if you (or your broker on your behalf) directly purchased or otherwise acquired BoA common stock or BoA Common Equivalent Securities during the Class Period as described above, or if you are a legal representative, heir, successor or assign of someone who did so.If you are not sure whether you are a Class Member, you can ask for free help from the Claims Administrator by: 1) writing to the Claims Administrator, Bank of America Securities Settlement, c/o Kroll Settlement Administration, P.O. Box 225391, New York, NY 10150-5391; 2) sending an email to [email protected]; or 3) calling within the U.S. and Canada:1-800-644-7835, or outside the U.S. and Canada: 215-845-4405.
The Plan of Allocation [see page 15 of the Notice of Class Action, in the Important Documents section of this website, or see Question 24 for a description of the Plan of Allocation] explains how the Net Settlement Fund will be allocated, and how claimants’ “Recognized Losses” will be calculated. Your share of the Net Settlement Fund will depend on several things, including: (i) how many shares of BoA common stock and/or BoA Common Equivalent Securities you bought; (ii) how much you paid for the securities; (iii) when you bought the securities; (iv) whether (and when) you sold the securities (and, if so, when and for how much you sold them); and (v) the amount of Recognized Losses of other Authorized Claimants.
It is unlikely that you will receive a payment for your entire Recognized Loss, because of the large number of potential Class Members. Each Authorized Claimant will receive their pro rata share of the Net Settlement Fund based on the Plan of Allocation approved by the Court. In general, an Authorized Claimant’s share will be his, her or its Recognized Loss divided by the total of all Authorized Claimants’ Recognized Losses and then multiplied by the total amount in the Net Settlement Fund.
Based on the proposed Plan of Allocation, the estimated average gross recovery for BoA common stock in the Class is $0.043 per share. A Class Member’s actual recovery will depend on several things, including: (i) the number of claims filed; (ii) when, in what quantities and for how much Class Members purchased and/or acquired BoA common stock or Common Equivalent Securities during the Class Period; and (iii) whether Class Members sold BoA common stock or Common Equivalent Securities and, if so, when and for how much. Thus, if, as some commentators on securities class actions have estimated, only about one-third of Class Members file claims, then the estimated average gross recovery would be about $0.129 per share.To qualify for a payment, you must have submitted a timely and valid Proof of Claim along with copies of the necessary supporting documents to the Claims Administrator so that it was postmarked (if mailed) or received (if submitted online), on or before November 14, 2016. Late claims will be subject to Court approval.
If you qualify as a Class Member, and you did not exclude yourself from the Class, you will stay in the Class, which means that as of the date that the Settlement becomes effective under the terms of the Stipulation (as amended) (the “Effective Date”), you will forever give up and release all “Released Plaintiff Claims” (as defined below) against the “Released Defendants” (as defined below). You will not in the future be able to bring a case asserting any Released Plaintiff Claim against the Released Defendants:
“Released Plaintiff Claims” means any and all claims, rights, actions, issues, controversies, causes of action, duties, obligations, demands, actions, debts, sums of money, suits, contracts, agreements, promises, damages, and liabilities of every kind, nature, and description (including but not limited to any claims for damages, interest, attorneys’ fees or expert or consulting fees, and any and all other costs, expenses or liabilities whatsoever), including both known claims and Unknown Claims (defined in sub-paragraph e, below), whether arising under federal, state, or foreign law, or statutory, common, or administrative law, or any other law, rule, or regulation, whether asserted as claims, cross-claims, counterclaims, or third-party claims, whether fixed or contingent, choate or inchoate, accrued or not accrued, matured or unmatured, liquidated or un-liquidated, perfected or unperfected, whether class or individual in nature, that previously existed, currently exist, or that exist as of the date of the Court approval of the Settlement or that may arise in the future, that Lead Plaintiff or any other Class Member asserted or could have asserted against Released Defendants in the Action or any other action or in any forum (including, without limitation, any federal or state court, or in any other court, arbitration proceeding, administrative agency, or other forum in the United States or elsewhere)that (i) in any way arise out of, are based upon, relate to, or concern the claims, allegations, transactions, facts, events, acts, disclosures, statements, representations, or omissions or failures to act alleged, set forth, referred to, involved in the Action, (ii) could have been raised in the Action or any of the complaints filed or proposed to be filed therein, or (iii) in any way arise out of, are based upon, relate to, or concern the holding, ownership, purchase, acquisition, disposition, or sale of, or other transaction in BoA common stock or BoA Common Equivalent Securities during the Class Period, or the holding, ownership, purchase, acquisition, disposition, or sale of, or other transaction in BoA common stock or BoA Common Equivalent Securities in or traceable to an offering during the Class Period, including, without limitation, claims that arise out of or relate to any disclosures, SEC filings, press releases, investor calls, registration statements, offering memoranda, web postings, presentations or any other statements by BoA or any other of the Defendants during the Class Period. Released Plaintiff Claims also include but not are limited to any claim under Rule 11 of the Federal Rules of Civil Procedure, 28 U.S.C. § 1927, or any rule, regulation, statute, contract, judicial opinion, common law or other legal or equitable principle that could be asserted at any time against Defendants or their counsel, including counsel’s employees and agents, concerning in any way whatsoever the defense or settlement of this Action, including any factual allegations or legal assertions made herein. Released Plaintiff Claims do not include claims to enforce the Settlement.
“Released Defendants” means any of the following: (a) Defendants; (b) the Defendants’ respective present and former parents, affiliates, subsidiaries, divisions, general partners, limited partners, limited liability partners, and any Person in which any Defendant has or had a controlling interest; and (c) the present and former Immediate Family, heirs, principals, owners, trustees, trusts, executors, administrators, predecessors, successors, assigns, members, agents, subsidiaries, employees, associates, Officers, managers, Directors, general partners, limited partners, bankers, attorneys, accountants, auditors, representatives, estates, divisions, advisors, estate managers, indemnifiers, insurers, and reinsurers of each of the Persons listed in subpart (a) or (b) of this definition. “Released Defendants” shall also include any entity or partnership (whether or not incorporated) which carries on business under a name which includes all or part of the PricewaterhouseCoopers name or is otherwise (directly or indirectly) within the worldwide network of PricewaterhouseCoopers firms, including PricewaterhouseCoopers International Limited and any member firm, network firm, specified subsidiary or connected firm of PricewaterhouseCoopers International Limited.
The Released Plaintiff Claims include any and all claims that any or all of the Releasing Parties do not know or suspect to exist in his, her, or its favor at the time of the release of the Released Claims, which if known by him, her, or it might have affected his, her, or its decision(s) with respect to the Settlement, including, with respect to Lead Plaintiff or any other Class Member, the decision to exclude himself, herself, or itself from the Class, or to object or not to object to the Settlement (collectively, including as described in the remainder of this paragraph, “Unknown Claims”). The Released Claims shall also include any claim under Rule 11 of the Federal Rules of Civil Procedure, 28 U.S.C. §1927 or any other rule, regulation, statute, contract, judicial opinion, common law or other legal or equitable principle that could be asserted at any time against Released Parties, their counsel, or their counsel's employees or agents concerning in any way whatsoever the institution, maintenance, prosecution, or defense of this litigation, including any factual allegations or legal assertions made herein. With respect to any and all Released Claims, the Settling Parties stipulated and agreed that, upon the Effective Date, each Releasing Party shall expressly, and shall be deemed to have, and by operation of the Judgment shall have, to the fullest extent permitted by law, expressly waived and relinquished any and all provisions, rights, and benefits conferred by any law of any state or territory of the United States, or principle of common law, which is similar, comparable, or equivalent to Cal. Civ. Code § 1542, which provides:
A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.
The Settling Parties further acknowledged that a Releasing Party may hereafter discover facts, legal theories, or authorities in addition to or different from those which he, she, or it now knows or believes to be true with respect to the subject matter of the Released Claims, but that the Settling Parties nevertheless intend to and shall expressly, fully, finally, and forever settle and release, and upon the Effective Date and by operation of the Judgment each other Releasing Party shall be deemed to have, and shall have, settled and released, fully, finally, and forever, any and all Released Claims as applicable, known or unknown, suspected or unsuspected, contingent or non-contingent, whether or not concealed or hidden, which have existed now or will exist, upon any theory of law or equity, including, but not limited to, conduct which is negligent, reckless, intentional, with or without malice, or a breach of any duty, law, or rule, without regard to the subsequent discovery or existence of such different or additional facts, legal theories, or authorities. The Settling Parties acknowledged, and agreed that each other Releasing Party by operation of law shall be deemed to have acknowledged, that the inclusion of “Unknown Claims” in the definition of Released Plaintiff Claims was separately bargained for and was a material and essential element of the Settlement.The exclusion deadline has now passed. You must have completed and mailed your request for exclusion form so that it was received no later than September 13, 2016.
The objection deadline has now passed. You must have completed and mailed your objection to any part of the Settlement, the proposed Plan of Allocation, and/or the application by Lead Counsel for attorneys’ fees and reimbursement of expenses so that it was received on or before September 13, 2016.
The Notice summarizes the proposed Settlement. More details are contained in the Stipulation and Agreement of Settlement, as amended, dated as of March 11, 2016, which appears in the Documents section of this website.
For additional information about the proposed Settlement and the lawsuit, see the Documents section of this website. You may also 1) email the Claims Administrator at [email protected]; 2) call the Claims Administrator within the U.S. and Canada:1-800-644-7835, or outside the U.S. and Canada call: 1-215-845-4405; 3) write to Bank of America Securities Settlement, Claims Administrator, P.O. Box 225391, New York, NY 10150-5391, 4) go to www.barrack.com , where you can download copies of the Notice and the Proof of Claim, or 5) call Lead Counsel Barrack Rodos & Bacine at (215) 963-0600.
Please do not call the Court, the Defendants or their counsel with questions about the Settlement.
You may also review the Stipulation, as amended, filed with the Court and all documents filed in the Action during business hours at the Office of the Clerk of the United States District Court for the Southern District of New York, Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, New York, NY 10007-1312.I. GENERAL PROVISIONS
The Net Settlement Fund shall be distributed to each Class Member who timely submits a valid Proof of Claim to the Claims Administrator that is accepted for payment by the Court (“Authorized Claimant”). The Net Settlement Fund will not be distributed to Authorized Claimants until the Court has approved the Settlement and a plan of allocation, and the time for any petition for rehearing, appeal or review, whether by certiorari or otherwise, of the order(s) approving the Settlement and the plan of allocation has expired. Defendants are not entitled to get back any portion of the Settlement Fund once the Effective Date of the Settlement has occurred. Defendants shall not have any obligation or responsibility for, interest in, or liability whatsoever with respect to the administration of the Settlement or disbursement of the Net Settlement Fund or the Plan of Allocation.
The Plan provides that Authorized Claimants will be eligible to participate in the distribution of the Net Settlement Fund only if Authorized Claimants purchased BoA common stock or BoA Common Equivalent Securities during the Class Period, and suffered losses as a result of their purchases and sales.
Approval of the Settlement is independent from approval of the plan of allocation. Any determination with respect to the plan of allocation will not affect the Settlement, if approved.
The Plan of Allocation set forth herein is the Plan that is being proposed by Lead Plaintiff and Lead Counsel to the Court for approval. The Court may approve this Plan as proposed or it may modify the Plan of Allocation without further notice to the Class. Any orders regarding a modification of the Plan of Allocation will be posted on this website, and Lead Counsel’s website, identified above.
Payment pursuant to the Plan approved by the Court shall be final and conclusive against all Class Members. No person shall have any claim of any kind against the Released Defendants or their counsel with respect to the administration of the Settlement, including the Plan of Allocation. No person shall have any claim against Lead Plaintiff, Lead Counsel, or the Claims Administrator or other agent designated by Lead Counsel arising from the Settlement and distributions made substantially in accordance with the Stipulation, the Plan of Allocation, or further orders of the court. Lead Plaintiff, Defendants, their respective counsel, Lead Plaintiff’s damages expert, and all other released parties shall have no responsibility or liability whatsoever for the investment or distribution of the Settlement Fund consistent with the terms of the Stipulation, the Plan of Allocation, or the determination, administration, calculation, or payment of any proof of claim form or nonperformance of the claims administrator, the payment or withholding of taxes, expenses, or costs incurred in connection with the taxation of the settlement fund, or any losses suffered by, or fluctuations in the value of, the Settlement Fund.
In developing the Plan of Allocation with respect to BoA common stock and Common Equivalent Securities purchasers, Lead Plaintiffs’ damages expert calculated the estimated amount of artificial inflation in the per share closing prices of BoA common stock that purportedly was proximately caused by Defendants’ alleged misrepresentations and material omissions. In performing this calculation, Lead Plaintiff’s damages expert considered price changes in BoA common stock in reaction to certain public announcements regarding BoA in which such alleged misrepresentations and material omissions were alleged to have been revealed to the market (which are termed “corrective disclosures”), adjusting for price changes that were attributable to market or industry forces. Because alleged corrective disclosures reduced the artificial inflation in several steps at and near the end of the Class Period, the alleged damages suffered by any particular claimant depends on when that claimant purchased and sold shares, or retained shares beyond the end of the Class Period.
Based on the proposed Plan of Allocation, a Recognized Loss will be calculated as set forth below for each purchase or other acquisition of an Eligible Security during the Class Period. The calculation of Recognized Loss will depend upon several factors, including (i) the amount of common stock or Common Equivalent Security that was converted to common stock on February 24, 2010 that was purchased or otherwise acquired; (ii) the date when the BoA common stock or BoA Common Equivalent Security was purchased or otherwise acquired; and (iii) whether the BoA common stock or BoA Common Equivalent Security was sold, and if so, when they were sold, and for what amounts. Any share of Common Equivalent Security that was not held until its conversion to common stock, and any share of common stock (whether originally issued as common stock or Common Equivalent Security that was converted to common stock) that was not held until at least the date of the first alleged corrective disclosure on October 14, 2010 has incurred no Recognized Loss and thus is not entitled to share in the recovery.
The Recognized Loss formulas within the Plan of Allocation with respect to BoA common stock and BoA Common Equivalent Securities are not indicative of damages that Lead Plaintiff may have sought to present to a jury, had the case gone to trial, and do not take into account certain defenses that were and might have been raised by Defendants had the case progressed to summary judgment motions and/or trial. To the contrary, the Recognized Loss formulas are intended solely for purposes of the Plan of Allocation, and cannot and should not be binding upon Lead Plaintiff or any Class Member for any other purpose.
The Recognized Loss will be calculated as described in Section II below for each purchase or other acquisition of BoA securities that are listed in the Proof of Claim form, and for which adequate documentation is provided.
The objective of the Plan of Allocation is to equitably distribute the Net Settlement Fund to those class members who suffered economic losses as a result of the alleged misrepresentations and omissions of Defendants, as opposed to losses caused by market or industry factors or other company-specific factors.
A. Eligible Securities
The BoA common stock and BoA Common Equivalent Securities, which were converted into BoA common stock, (“Eligible Securities”) are the only BoA securities for which an Authorized Claimant may be entitled to receive a distribution from the Net Settlement.
B. Overall Allocation of the Net Settlement Fund
As previously described in the Notice, the Net Settlement Fund is the remainder of the Settlement Fund after deduction of Court-awarded attorneys’ fees and expenses, settlement administration costs and any applicable taxes.
The Net Settlement Fund will be allocated to Authorized Claimants as follows:
The Net Settlement Fund will be distributed to Class Members who submit valid, timely Proof of Claim and Release forms (“Claimants”) under the Plan of Allocation (the “Plan”) described below. The Plan provides that Claimants will be eligible to participate in the distribution of the Net Settlement Fund only if Claimants purchased or otherwise acquired Bank of America Corporation (“BoA”) common stock or BoA Common Equivalent Securities that subsequently automatically converted to common stock during the “Class Period,” February 27, 2009 to October 19, 2010.
Defendants have had, and shall have, no involvement or responsibility for the terms or application of the Plan described herein. The Court may approve the Settlement and Stipulation, as amended, even if it does not approve the Plan for the settlement proceeds.
II. Recognized Loss
To the extent there are sufficient funds in the Net Settlement Fund, each Claimant will receive an amount equal to the Claimant’s “Recognized Loss,” as described below. If, however, as expected, the amount in the Net Settlement Fund is not sufficient to permit payment of the total Recognized Loss of each Claimant, then each Claimant shall be paid the percentage of the Net Settlement Fund that each Claimant’s Recognized Loss bears to the total of the Recognized Losses of all Claimants – i.e., the Claimant’s pro rata share of the Net Settlement Fund. Payment in this manner shall be deemed conclusive against all Claimants.
The proposed Plan reflects the Plaintiff’s allegations that over the course of the Class Period, the trading prices of the Eligible Securities were artificially inflated as a result of the Defendants’ alleged misrepresentations and omissions concerning this matter.
Estimated damages and the Plan were developed based on event study analysis, which sought to determine how much artificial inflation was in the stock price on each day during the Class Period, assuming the viability of the claims asserted on behalf of the Class, by measuring how much the stock price was inflated as a result of the alleged misrepresentations and omissions and declined as a result of disclosures that corrected the alleged misrepresentations and omissions.
Based on the foregoing, and for purposes of this settlement only, Recognized Loss will be calculated as follows:
For each share of the Eligible Securities purchased or otherwise acquired during any of the periods shown in the left column of Table-1, and:
sold within the same period, the Recognized Loss per share is zero.
Please refer to the Notice, located in the Important Documents section, to review Table-1 and Table-2.
C. Additional Provisions
For Class Members who held shares at the beginning of the Class Period, or who made multiple purchases, acquisitions or sales during the Class Period, the first-in, first-out (“FIFO”) method will be applied to such holdings, purchases, and sales for purposes of calculating a Recognized Loss. Under the FIFO method, shares sold during the Class Period will be matched first against shares held at the beginning of the Class Period. The sale of any remaining shares during the Class Period will then be matched in chronological order against shares purchased during the Class Period.
A Claimant will be eligible to receive a distribution from the Net Settlement Fund only if a Claimant had a net loss, after all profits from transactions in the Eligible Securities during the Class Period are subtracted from all losses.
III. DISTRIBUTION OF THE NET SETTLEMENT FUND
A. The proceeds of the settlement will be distributed to Authorized Claimants in accordance with this Plan of Allocation (the “Plan”) or as otherwise ordered by the Court. The amount to be distributed to Authorized Claimants will be determined as follows: first, the expenses of the litigation (including taxes, approved costs and fees) will be deducted from the Settlement Amount to arrive at the Net Settlement Fund; and second, the Net Settlement Fund plus the interest earned thereon shall be distributed to Authorized Claimants.
B. An Authorized Claimant’s pro rata share of the Net Settlement Fund will be determined based upon the Authorized Claimant’s “Recognized Loss” (as described above in Section II).
C. General Provision: Subject to Court approval or modification without further notice, distribution of the Net Settlement Fund to Authorized Claimants will be distributed in accordance with the following general provisions:
1. To the extent there are sufficient funds in the applicable portion of the Net Settlement Fund, based on the overall allocation stated above, each Authorized Claimant will receive an amount equal to the Authorized Claimant’s Recognized Loss, subject to the minimum distribution amount identified in sub- part 3 below;
2. If the amount in the Net Settlement Fund is not sufficient to permit payment of the total Recognized Loss of each Authorized Claimant, then each Authorized Claimant shall be paid the percentage of the Net Settlement Fund that each Authorized Claimant’s Recognized Loss bears to the total of the Recognized Losses of all Authorized Claimants (“pro rata share”) within the overall allocation pool for that Authorized Claimant’s purchases, subject to the minimum distribution amount identified in sub-part (c) below. Payment in this manner shall be deemed conclusive against all Authorized Claimants.
3. In light of the costs of administering and paying very small claims, no payment will be made to any Authorized Claimant if the payment to that Claimant would be less than $10. The calculation of the pro rata share distribution amounts will not include such claims.
4. Any person or entity that sold BoA common stock “short” shall have no Recognized Loss with respect to purchases during the Relevant Period to cover short sales. Claimants must identify all short sales and purchases to cover short sales on the Claimant’s Proof of Claim form. The date of covering a “short sale” is deemed to be the date of purchase or other acquisition of BoA common stock. The date of a “short sale” is deemed to be the date of sale of BoA common stock. The Recognized Loss for “short sales” is zero. In the event that there is an opening short position in BoA common stock, the earliest Class Period purchases shall be matched against such opening short position, and not be matched against sales, until that short position is fully covered.
5. The price per share, purchased or sold, shall be exclusive of all commissions, taxes and fees.
IV. ADDITIONAL PROVISIONS
Purchases or acquisitions and sales of BoA common stock or BoA Common Equivalent Securities shall be deemed to have occurred on the “contract” or “trade” date as opposed to the “settlement” or “payment” date. The receipt or grant by gift, inheritance or operation of law of BoA Securities shall not be deemed a purchase, acquisition or sale of such securities for the calculation of an authorized claimant’s recognized loss for these securities, nor shall the receipt or grant be deemed an assignment of any claim relating to the purchase/acquisition of such BoA common stock or BoA Common Equivalent Securities, unless: (i) the donor or decedent purchased or otherwise acquired such BoA common stock or BoA Common Equivalent Securities during the class period; (ii) no proof of claim form was submitted by or on behalf of the donor, on behalf of the decedent, or by anyone else with respect to such BoA common stock or BoA Common Equivalent Securities; and (iii) the assignment is specifically provided for in the instrument of gift or assignment.
To the extent a claimant had a market gain from his, her, or its overall transactions in BoA common stock or BoA Common Equivalent Securities during the relevant period, the value of the claim will be zero. Such claimants will, in any event, be bound by the settlement. To the extent that a claimant suffered an overall actual market loss on his, her, or its overall transactions in BoA common stock or BoA Common Equivalent Securities during the relevant period, but that actual market loss was less than the total recognized loss calculated above, then the claimant’s Recognized Loss shall be limited to the amount of the actual market loss.
Distributions will be made to Authorized Claimants after all claims have been processed and after the Court has finally approved the Settlement. Following an initial distribution of the Net Settlement Fund, if Lead Counsel, in consultation with the Claims Administrator, determines that it is cost-effective to do so, the Claims Administrator will conduct a redistribution of any funds remaining in the Net Settlement Fund by reason of returned or uncashed checks or otherwise, to Authorized Claimants who have cashed their initial distribution checks and who would receive at least $10 on such redistribution based on their Recognized Losses, after payment from the Net Settlement Fund of any unpaid costs or fees incurred in administering the funds, including for such redistribution. Additional redistributions may occur thereafter to Authorized Claimants if Lead Counsel, in consultation with the Claims Administrator, determines that additional redistribution is cost-effective. At such time as it is determined that the redistribution of funds remaining in the Net Settlement Fund is not cost-effective, the remaining balance of the Net Settlement Fund shall be contributed to a tax-exempt non-sectarian, not-for-profit charitable organization serving the public interest, qualified in accordance with Internal Revenue Code §501(c)(3), designated by Lead Plaintiff and approved by the Court.
Each Claimant shall be deemed to have submitted to the jurisdiction of the United States District Court for the Southern District of New York with respect to his, her or its Proof of Claim form.
