Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

American International Group, Inc. (AIG) Slams Bank of America Corp (BAC) at Settlement Hearing

Page 1 of 2

The Article 77 hearing in Justice Barbara Kapnick’s courtroom in Manhattan may have gotten off to a slow start, but a lot of action has taken place in only two days. The question of whether or not The Bank of New York Mellon Corporation (NYSE:BK) acted reasonably in negotiating the $8.5 billion settlement between 22 institutional investors and Bank of America Corp (NYSE:BAC) has been asked, with some very interesting opening arguments from BONY and American International Group, Inc. (NYSE:AIG), the settlement’s biggest detractor.

American International Group Inc (NYSE:AIG)

Commentary not very positive for B of A
Since the hearing is about BONY’s judgment, the bank’s attorney, Matthew Ingber ticked off several points indicating that the decision to settle was fair and reasonable, based on the information the bank had at its disposal at the time. As Mark Palmer of BTIG Research notes, though, much of that information has since been invalidated.

For example, expert witness Professor Robert Daines, of Stanford Law School, was of the opinion that the state of Delaware, with its very stringent laws regarding de facto mergers and successor liability, would hear this case. Of course, the venue was changed to New York, which has a less rigorous test in place for this type of issue.

Another point concerns testimony by Professor Barry Adler of the New York University of Law. In his opinion, Bank of America Corp (NYSE:BAC)’s liability should be tied to the losses that were specifically due to any breach of representation or warranty. Unfortunately for B of A, this argument won’t hold water, since many rulings over the past two years have come down on the side of plaintiffs not having to show that such a breach caused their losses.

AIG has its turn
American International Group, Inc. (NYSE:AIG)’s lawyer also spoke, stating that not only was the settlement amount much too low, but that there was collusion between the two big banks that kept the process from being equitable to the complainants. According to AIG, BONY should have sued to obtain pertinent loan files that B of A declined to turn over to the negotiators, so the true extent of the investors’ losses could have been determined.

The insurer also jabbed at BlackRock, Inc. (NYSE:BLK) , another institutional investor that has since pulled its objections to the settlement, alleging a “cozy” relationship between the equity firm and B of A, according to The Wall Street Journal. Lastly, American International Group, Inc. (NYSE:AIG) saw Bank of America Corp (NYSE:BAC)’s coverage of legal fees for trustee BONY and the group of investors as further proof of a flawed resolution procedure.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!