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BofA pays Tutor Perini $37 million to resolve fraud lawsuit
June 6, 2017 / 10:01 PM / 6 months ago

BofA pays Tutor Perini $37 million to resolve fraud lawsuit

BOSTON (Reuters) - Bank of America Corp (BAC.N) has paid Tutor Perini Corp (TPC.N) $37 million to resolve a lawsuit claiming the bank defrauded the construction company by selling it millions of dollars of auction-rate securities it knew were on the brink of collapse.

A Bank of America logo is seen in New York City, U.S. January 10, 2017. REUTERS/Stephanie Keith

The settlement, disclosed by Tutor Perini in a filing with the U.S. Securities and Exchange Commission on Tuesday, resolves a lawsuit the Los Angeles-based company filed against the bank in 2011 in federal court in Boston.

The deal came after a federal appeals court in November revived the lawsuit, holding that a lower court judge erred in dismissing federal and Massachusetts state securities fraud claims against the second-largest U.S. bank.

A jury trial in the lawsuit had been scheduled for June 19 but on May 23 the parties informed the court that they had reached a settlement. Terms were not disclosed at that time.

Under the agreement, neither side made any admission of liability or wrongdoing, Tutor Perini said.

A spokesman for Bank of America did not immediately respond to a request for comment.

In the lawsuit, Tutor Perini alleged that Bank of America pushed it to buy auction-rate securities in late 2007 and early 2008 despite knowing the market was “one step away from illiquidity.”

The $330 billion auction-rate market seized up in February 2008 when dealers stopped supporting it, saddling investors with illiquid debt that had often been marketed as a cash substitute.

Bank of America was among more than one dozen companies that agreed to repurchase more than $61 billion of auction-rate securities to settle claims by Andrew Cuomo, then New York’s attorney general and now its governor.

Tutor Perini said corporate investors such as itself were ineligible for these settlements.

The case is Tutor Perini Corp v. Banc of America Securities, LLC et al, U.S. District Court, District of Massachusetts, No. 11-cv-10895.

Reporting by Nate Raymond in Boston; Editing by Bill Trott

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