The following is an excerpt from Avi Salzman | September28, 2012 | Barrons.com |
Bank of America (BAC) announced today it would pay $2.34 billion to settle claims that it misled investors about Merrill Lynch’s financial health before it bought the company in 2009. It was the 11th major settlement by the bank since the financial crisis; in all, the settlements have cost the bank $29 billion, the Wall Street Journal notes.
The deal should strip about 28 cents from third quarter EPS, Bank of America said.
Shares were down 1.7% in afternoon trading.
Often a settlement like that will ease investors’ minds — “glad that’s taken care of.” But this one is hurting the stock, in part because the size of the deal may have stunned investors.
“This settlement is far larger than we expected given the weak merits of such suits and historical precedence,” wrote JMP Securities analyst David Trone.
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