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Bank of America settlement highlights important business lessons

Recently, financial giant Bank of America became the subject of undesired attention and negative publicity. The corporation was accused of fraudulent and misleading behavior in relation to its acquisition of the famed Merrill Lynch. For many owners of small and medium-size businesses, this story may not feel relevant to the issues that you face every day. However, businesses of any size may get tied up in business litigation if certain standards of behavior are not adhered to.

As a result of the scandal, Bank of America is opting to settle a related class-action lawsuit for $2.43 billion. These financial concessions will help to reimburse investors whose stock share prices were dramatically affected by undisclosed information related to the Merrill Lynch acquisition.

Essentially, Bank of America announced that it was acquiring the company at the same time that Lehman Brothers collapsed during the apex of the financial crisis. Bank leadership failed to reveal to investors that Merrill had been hemorrhaging funds during its final year. Bank of America's financial situation subsequently worsened, resulting in a significant federal government bailout.

The investors whose stock plummeted as a result of these events now stand to benefit from the largest settlement of its kind in history.

Though small and medium-size businesses are unlikely to ever struggle with deception and a multi-billion dollar merger, the lesson that the Bank of America settlement highlights is an important one for all business owners: failure to engage in fair practices and dealing may turn a profit in the immediate future, but these tactics will likely end up harming your pocketbook and reputation in the end.

Source: Boston.com, "Bank of America to pay $2.43B in settlement," Marcy Gordon, Sept. 28, 2012

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