The U.S. Court of Appeals for the Second Circuit affirmed a district court’s dismissal of a shareholder class action won by Munger, Tolles & Olson on behalf of Bank of America Corporation (BofA) and its senior executives involving the bank’s knowledge of potential litigation by American International Group (AIG).
In a lawsuit originally filed in August 2011, BofA shareholders alleged that BofA should have warned investors earlier that year that AIG was threatening to file a $10 billion mortgage-backed securities fraud suit against the bank. The plaintiffs alleged that shareholders were damaged when AIG eventually filed and announced its lawsuit, and the price of BofA’s stock dropped sharply.
The lawsuit was dismissed with prejudice in November 2013, with U.S. District Judge John G. Koeltl of the Southern District of New York ruling that BofA had sufficiently disclosed the mortgage-backed securities litigation it faced generally, and that its truthful statements about its litigation exposure were not rendered misleading by the absence of a specific disclosure about AIG’s potential lawsuit.
The Second Circuit affirmed the district court’s judgment on May 19, 2014. The three-judge panel concluded that the complaint did not “plausibly allege circumstantial evidence of conscious misbehavior.”
The case is In re: Bank of America AIG Disclosure Securities Litigation, 2014 WL 2019279 (2d Cir. May 19, 2014) (affirming In re: Bank of America AIG Disclosure Securities Litigation, 2013 WL 5878814 (S.D.N.Y. Nov. 1, 2013)). George M. Garvey, Marc T.G. Dworsky, Newman A. Nahas and Joshua Patashnik defended BofA in the action.
Mr. Garvey focuses his practice on securities and corporate governance, including class actions and derivative suits.
Mr. Dworsky handles complex litigation in federal and state courts nationwide, particularly in the financial sector.
Mr. Nahas has a wide-ranging practice, with a focus on securities and corporate governance.
Mr. Patashnik focuses primarily on complex civil litigation and appellate litigation.