Bank of America Corp. has agreed to pay $315 million to settle claims that its Merrill Lynch unit made false and misleading statements about the quality of subprime MBS it sold to investors.

The proposed settlement was filed late Monday night with the U.S. District Court in Manhattan.
The settlement, which still requires the court's approval, would be one of the largest against investment banking firms sued over misrepresenting the value of nonprime MBS sold during the housing boom.

A $285 million settlement Citigroup struck with the Securities and Exchange Commission (SEC) was rejected last week by a federal judge in New York.

The suit against BofA was filed by the Public Employees' Retirement System of Mississippi. It claimed that Merrill Lynch, which B of A acquired in late 2008, made false statements or omitted key details relating to the sale of so-called mortgage pass-through certificates.

Many of the securities that were initially rated as investment grade contained risky loans that came through Countrywide Financial (which B of A bought in August in 2008) and other now-defunct lenders, including New Century Financial Corp. and IndyMac Bank.

BofA agreed to the settlement without admitting or denying wrongdoing, according to published reports.

During the boom, Merrill, CFC, and Citigroup were all top ranked underwriters of nonprime MBS.

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