Log in
Lost password
Become a member for free
Sign up
Sign up
Dynamic quotes 

4-Traders Homepage  >  Shares  >  Nyse  >  Bank of America Corp    BAC

Delayed Quote. Delayed  - 10/07 03:10:37 pm
15.6601 USD   -0.19%
12:15p PROFITS AT BIG : New York Fed
11:59a BANK OF AMERICA : Property transfers
10:46aDJTech Startup Pure Storage Trades Below IPO Price in Market Debut
News SummaryMost relevantAll newsSector news 

Bank of America Corp : Bank of NY Mellon to pay $114 million in Medical Capital accord

02/22/2013 | 05:11pm US/Eastern

(Reuters) - Bank of New York Mellon Co has agreed to pay $114 million to settle claims over its role as trustee for debt issued by Medical Capital Holdings Inc, a medical receivables financing company that collapsed in 2009 amid fraud allegations.

Investors accused Bank of New York Mellon, the world's largest custodial bank, of failing to properly review Medical Capital's dealings before letting the company use investors' money, breaching its fiduciary and contractual obligations to those investors.

Medical Capital and two top executives had been sued by the U.S. Securities and Exchange Commission for fraud in July 2009, and a receiver was appointed the next month.

According to court papers, the Tustin, California-based company raised about $1.7 billion from more than 20,000 investors from 2003 until the SEC shut it down.

In December 2011, a forensic accounting report from the receiver, Thomas Seaman, estimated Medical Capital investor losses at between $839 million and $1.08 billion, and said the company used a "Ponzi-like scheme" to extract excessive fees.

According to papers filed on Thursday with the U.S. District Court in Santa Ana, California, Bank of New York Mellon agreed to settle all claims brought by investors in class-action litigation, two related litigations and the receiver.

Investors in the class action would share a $90.68 million cash payment, and their lawyers plan to seek as much as $13.6 million in fees plus $1.8 million for expenses, the papers show.

Related class-action litigation against Wells Fargo & Co, also a trustee for some Medical Capital debt, would continue, the papers show.

The settlement requires court approval.

Bank of New York Mellon denied wrongdoing, but settled to avoid the risks and costs of litigation, court papers show.

"We are pleased to be putting this matter behind us," bank spokesman Kevin Heine said.

David Azar, a lawyer for some of the investors, declined to comment.

A Wells Fargo spokesman did not immediately respond to a request for comment.

One of the Medical Capital executives sued by the SEC, former president Joseph Lampariello, pleaded guilty last May to a related criminal wire fraud charge, court records show. He has yet to be sentenced, those records show.

The case is In re: Medical Capital Securities Litigation, U.S. District Court, Central District of California, No. 10-ml-02145.

(Reporting by Jonathan Stempel in New York; Editing by Leslie Adler)

By Jonathan Stempel

React to this article
11:59a BANK OF AMERICA : Property transfers
10:46aDJTech Startup Pure Storage Trades Below IPO Price in Market Debut
07:07a BANK OF AMERICA : Assigned Patent
05:31a JPMorgan buys more mortgages from other lenders as market shrinks
10/06 BANK OF AMERICA : BRIEF: What's closed, open on Columbus Day, Oct. 12, 2015, in ..
10/06 BANK OF AMERICA : The Day, New London, Conn., David Collins column
10/06DJA Shift in Risk Pinches Banks
10/06DJA Shift in Risk Pinches Banks--Update
10/06 BANK OF AMERICA : Add-On Products Add up to $63M Settlement With FDIC
Duration : Period :
Bank of America Corp Technical Analysis Chart | BAC | US0605051046 | 4-Traders
Income Statement Evolution
More Financials