(CN) - Bank of America has reached a $2.4 billion settlement to resolve claims it concealed billions of dollars losses before the acquisition of Merrill Lynch.
Bank of America consistently denied allegations that it misled bank shareholders, and said Friday it had reached the settlement to avoid the expense of drawing out litigation.
According to shareholders in the consolidated class action, Bank of America knew that Merrill was saddled with tens of billions in losses after the subprime mortgage crisis. But shareholders claimed they were none the wiser when they approved the $50 billion buyout.
Even after the deal was done in January 2009, shareholders said they were still unaware that Merrill had lost more than $21 billion in the fourth quarter of 2008, and that Bank of America needed a $138 billion taxpayer bailout to absorb Merrill's losses.
After Bank of America revealed Merrill's fourth quarter losses and the bailout, it was hit with a market capitalization loss of close to $50 billion.
Bank of America settlements over mortgage, securities and customers actions now total at least $29 billion, according to the Wall Street Journal.
New York Judge Kevin Castel of the Southern District Federal Court will review the proposed settlement.
Bank of America estimates that money it spent on the litigation for the third quarter is $1.6 billion.
"Resolving this litigation removes uncertainty and risk and is in the best interests of our shareholders," said Bank of America Chief Executive Officer Brian Moynihan in a statement. "As we work to put these long-standing issues behind us, our primary focus is on the future and serving our customers and clients."
Plaintiffs' lead counsel, Bernstein Litowitz Berger & Grossmann LLP, did not immediately respond to a request for comment.