A proposed settlement to end litigation brought by Pennsylvania Public School Employees' Retirement System against Bank of America over its mortgage-backed securities program has been given preliminary approval.
According to documents filed with the U.S. District Court in New York, the $48.5 billion Harrisburg-based pension fund has agreed to settle all claims in its class action against Bank of America for a cash payment of $335 million.
If the court approves the settlement, it will resolve claims in the lawsuit that Bank of America's investors were allegedly misled about the company's exposure to demands to repurchase mortgage-backed securities and other mortgage loans that had been sold by Bank of America and Countrywide Financial Corp.
It would also resolve allegations about risks to Bank of America arising from its use of and reliance upon a national electronic database that tracks changes in mortgage servicing rights and beneficial ownership interests in loans secured by residential real estate.
The proposed settlement would settle claims of anyone who purchased or acquired Bank of America common stock or common equivalent securities from Feb. 27, 2009, through Oct. 19, 2010.
PennPSERS originally filed the class action on Sept. 23, 2011.
PennPSERS spokeswoman Evelyn Williams confirmed the court granted preliminary approval of the settlement but declined to comment further. Bank of America spokesmen Lawrence Grayson declined to comment.