SAN FRANCISCO (AP) Bank of America has agreed to a $35 million settlement of a class-action lawsuit alleging it gouged thousands of trust accountholders and then shortchanged them on their refunds.
The settlement announced Friday ends six years of jousting over whether Bank of America should be penalized for alleged financial wrongdoing involving trust accounts held by Security Pacific National Bank.
Bank of America, now based in Charlotte, N.C., bought Security Pacific in 1992 and inherited its liabilities.
San Rafael attorney Robert W. Mills, who represented Bank of Americas customers, said the $35 million was believed to be the largest payment ever made to settle allegations of trust account improprieties.
This will send a signal to other banks that if they mess with trust fees, they will face major exposure, he said.
Bank of America spokeswoman Shirley Norton said the bank decided to settle the case to limit its liability and eliminate a time-consuming legal distraction.
The bank did not acknowledge any wrongdoing in the settlement.
About 6,500 trust account beneficiaries, including many children and charities, are expected to divvy up between $20 million and $25 million after legal fees and other costs, said Derek Howard, an Oakland attorney for the accountholders.
The settlement wont close the books on the case, which began in 1994 shortly after Bank of America refunded $42 million in trust account fees and simple interest.
Accountholders sued, saying they should have been paid compounded interest; if that argument eventually wins in court, they could get as much as $40 million more.
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