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Bank class-action payouts being made
By JEFF HARRINGTON © St. Petersburg Times, published January 4, 2001 Three years and five months after NationsBank agreed to pay $30-million to settle a landmark class-action case filed by its customers, the checks finally are being cut. U.S. District Judge Steven Merryday in Tampa has signed off on a plan to distribute about $26-million to some 7,200 past and present customers of the bank, which since has been renamed Bank of America. Customers lost from a few dollars to thousands of dollars by investing in securities they erroneously thought were federally insured. Though a settlement was reached in 1997, lawyers and fund administrators took much longer than anticipated to decide how much money individual investors were due. Merryday received the proposed payout list in September. "It took a long time, but sometimes justice takes longer than one would want," said Jonathan Alpert, a Tampa lawyer who led the class-action suit against NationsBank. "It was a very complicated swindle by the bank. It was a complicated settlement process." Bank of America, without acknowledging wrongdoing, set aside the money in 1998 in a fund it could not touch. "This has been anticipated for some time," bank spokeswoman Ann McNeish said. Originally, attorneys expected the money to be distributed by late 1999. McNeish said she could not address reasons for the delay. But Alpert and fund administrators said they were trying to include as many claimants as possible and that calculating payouts was an arduous process. In an order dated Dec. 28, Merryday directed the Garden City Group, the New York group administering the fund, to distribute the money within 14 days. Duped mutual fund customers are being paid dollar for dollar for their losses, reimbursed as if they had invested as they thought they had: in a "safe" one-year CD paying 5 percent. Investors in individual stocks and bonds, who the court thinks should have had a better idea of the risk, will get back about 50 percent of their loss. Most losses were for less than $20,000. But a few claimants were heavy investors, such as Julia G. Urena of Madeira Beach, who lost $240,643. Claims of less than $3 will not be distributed. The allegations against the bank originated in Tampa in 1994 when NationsBank broker David Cray told the St. Petersburg Times that his company was using misleading sales practices. Cray lost his job after the story was published and filed suit againstNationsBank. The story prompted NationsBank customer Leilani Demint to file a class-action suit. Investigations followed by Florida, Texas, the Securities and Exchange Commission, the Office of the Comptroller of the Currency, the National Association of Securities Dealers and the U.S. Attorney's Office. Other banks across the country were investigated for similar practices. To settle the last of the regulatory investigations, Bank of America in November agreed to pay a civil fine of $6.75-million to the U.S. Attorney's office and set aside $11.5-million for investor losses in two government securities.
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From the Times Business report
From the AP
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