A union pension plan became the latest plaintiff in a growing list of lawsuits brought about against Bank of America (NYSE: BAC) allegedly for not adequately disclosing foreclosure problems on mortgages that were tied to the mortgage-backed securities that it sold to investors.
The Pipefitters Local No. 636 filed a suit against BofA in New York late yesterday on the grounds that the banking giant intentionally failed to disclose information on home foreclosures, which eventually led to a decline in the bank’s share price.
In the suit, the Pipefitters state that its $1.3-billion pension plan bought 25,000 shares of BofA common stock at the beginning of October last year when it was trading at about $19.48 per share, a price the Pipefitters claim was artificially inflated.
On October 19, BofA reported a $7.3-billion net loss for the third quarter, and that it received $18- billion of claims about faulty home loans that it would have to purchase after its acquisition of Countrywide Lending.
BofA’s stock dropped to $11.80 per share on the news.
This is just the latest in a long string of lawsuits BofA has had to face recently. Last week, the Countywide unit was sued by twelve institutional investors led by retirement giant TIAA-Cref, for allegedly perpetrating a massive fraud.
In that suit, plaintiffs alleged that Countrywide marketed mortgage-backed securities as safe, low-risk investments while knowing that the bonds were tied to high-risk mortgages.
Additionally, BofA settled a case yesterday against former Countrywide employees -- including its chief executive Angelo Mozilo -- brought on by the state of California in 2008, which had accused Countrywide of engaging in predatory lending practices against homeowners.
That case was settled for $6.5-million. As part of the settlement, both Countrywide and BofA denied any wrongdoing.