Merrill Lynch Reportedly Agrees to Pay $315 Million in Mortgage-Backed Securities Settlement

Merrill Lynch has agreed to pay $315 million to settle a class action filed against it on behalf of investors in 18 mortgage-backed securities trusts, according to a Reuters News & Insight piece on Nov. 18.

Court documents showed that the lawsuit, filed in February 2009 with the U.S. District Court in the Southern District of New York, alleged that Merrill Lynch violated the Securities Act related to the sale of mortgage pass-through certificates by using documents that "contained untrue statements and material omissions."

Bernstein Litowitz Berger & Grossmann, who are representing the class, specified that the offering documents failed to disclose, among other things, "that loan originators had systematically ignored Merrill Lynch's stated underwriting and appraisal standards."

The parties had informed the court on Oct. 28 that they had reached a settlement, but no details were provided.

The $315 million figure was revealed by Reuters reporter Alison Frankel, citing an unnamed source familiar with the deal.

The figure is the most any MBS defendant has agreed to pay in a public settlement over investors' claims, according to Frankel. It is also the fourth publicly known MBS settlement and the first MBS case Bank of America has agreed to settle, she added.

Terms of the settlement are expected to be filed on Dec. 5.