Merrill Lynch & Co, now owned by Bank of America Corp
The plaintiffs had sued Merrill in November 2007, alleging violations of the Employee Retirement Income Security Act (ERISA). The parties entered a settlement on February 27, and a federal judge endorsed it last month, court papers show. Lawyers for the plaintiffs announced the settlement on Monday.
Merrill did not immediately return requests for comment.
The plaintiffs had alleged that Merrill offered its stock as a retirement plan option when it was imprudent to do so, given the company's growing exposure to subprime mortgages and other toxic debt.
According to the complaint, Merrill's actions ran directly counter to the purpose of ERISA pension plans to provide funds for employees' retirement.
The class period covers September 30, 2006 through December 31, 2008. Merrill shares lost more than 80 percent of their value over that time, according to Merrill's Website.
Bank of America acquired Merrill on Jan 1, 2009. Merrill posted a $15.84 billion loss in the fourth quarter.
A July 27 hearing has been set for court approval of the settlement.
The case is Estey v. Merrill Lynch & Co, U.S. District Court, Southern District of New York (Manhattan), No. 07-10268.
(Reporting by Jonathan Stempel; Editing Bernard Orr)