New York Sues BofA Merrill Lynch over Subprime Investments
New York State Comptroller Thomas DiNapoli is suing Bank of America (BAC) and Merrill Lynch over losses related to subprime mortgage investments. The separate lawsuits against each company allege the firms violated securities laws. DiNapoli took the action as trustee of the $132.6bn New York State Common Retirement Fund, which sustained losses on investments related to subprime mortgages. The lawsuit against BofA seeks recovery for losses incurred based on the company's alleged "misrepresentation and concealment of material facts" regarding its purchase of Merrill Lynch, according to a statement from DiNapoli's office. "These companies thought they could get away with profiting at the expense of New York's pensioners and taxpayers through fraudulent activities and misleading public disclosures, and they were mistaken," DiNapoli said. "Today, these companies have been served notice that they will be held accountable for losses caused through their misconduct. Investors, like the Fund, can tolerate risk -- it's what we do -- but we cannot tolerate this kind of corporate irresponsibility." DiNapoli filed the complaints in the US District Court for the Southern District of New York, in an effort to protect the interests of more than 1m members, beneficiaries and retirees who depend on the Fund. A spokesperson for BofA could not return a request for comment before this story was published. DiNapoli's complaints arrive as the latest in a string of lawsuits over failed mortgage-linked investments. A US District judge recently upheld a class-action lawsuit brought against Citigroup (C) by a group of pension funds and an insurance company that purchased bonds issued between May 2006 and August 2007. Additionally, London-based Cambridge Place Investment Management recently filed a complaint in a Massachusetts court alleging 15 US banks provided false or misleading information about subprime mortgage investments. Write to Diana Golobay. Disclosure: the author holds no relevent investments.