During a week in which Bank of America (NYSE:BAC) held an uneventful shareholder meeting and saw a suit over mortgages significantly narrowed, the company got more good news on lingering litigation over its Merrill Lynch acquisition. Much like it avoided trouble with the government after settling with plaintiffs out of court over AIG (NYSE:AIG), BofA could be off the hook with respect to its purchase of Merrill Lynch.
The precedent in such cases is clear. Legal analysts told Reuters that, once civil suits are settled, it is difficult (if not impossible) to bring another case against a company, even if the settlement appears unfair. Jacob Zamansky told Reuters that the shareholders’ settlement in AIG’s case ended that dispute and it could mean exactly the same thing following the approval of a $2.45 billion settlement over Merrill.
Bank of America still has several cases pending, but this news is important as they lean toward resolution of all legal matters in hopes of increasing profitability. Earlier this week, BofA received word it would not have to account for violations of the False Claims Act over mortgages from its Countrywide department, after settling for $1.7 billion in yet another lawsuit from the 2007-2008 period. Still, there is another $8.5 billion on the line in another mortgage case…
The next news over settlements and claims stemming from mortgage suits will arrive May 30. In the meantime, BofA is privately celebrating over its resolution with MBIA (NYSE:MBI) and how smoothly its shareholder meeting unfolded. A few dozen protesters stood outside its Charlotte headquarters this week to voice displeasure with the company’s practices. It was a far cry from the estimated 600 people who showed up last year for the annual event.
The mood inside the shareholder meeting was also relaxed, attributable to the highly successful run of BofA stock and the disciplined approach the company is taking to its never-ending string of lawsuits. After seeing a way out of more trouble over Merrill Lynch, the company can look to May 30 as a decisive day in the future of the company. If it can avoid complications with that settlement, it can make short-term goals of increased profitability more believable.