By Shayndi Raice
A New York State judge approved an $8.5 billion settlement
between Bank of America Corp. (BAC) and investors over soured
mortgage-backed securities.
The deal, made in June 2011, was closely watched as a landmark
agreement in which a bank agreed to pay billions to settle claims
over mortgage securities turned toxic during the financial
crisis.
American International Group Inc. (AIG) opposed the settlement.
Lawyers for the insurance giant argued in court that the deal was
unfair and that the trustee for investors, Bank of New York Mellon
Corp. (BK), didn't fulfill its fiduciary duty.
New York State Supreme Court Judge Barbara Kapnick found that
the trustee acted in good faith and gave a full and fair
opportunity to all investors to make their views known on the
deal.
The ruling is a major victory for the Charlotte, N.C., bank. It
concludes a two and a half year process to gain approval for the
deal, which caps about half of the claims against Bank of America
for the sale of mortgage-backed securities to private investors
before the U.S. housing collapse.
Write to Shayndi Raice at shayndi.raice@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires