Bank of America to pay $9.3 billion in claims

MORTGAGES
Major bank to pay $9.3 billion in claims

Bank of America will spend $9.33 billion to resolve a dispute over mortgage securities with the Federal Housing Finance Agency, the regulator that oversees Fannie Mae and Freddie Mac.

The agency sued 18 financial institutions in 2011 over their sales of mortgage securities to Fannie and Freddie. It alleges many banks falsely represented the mortgage loans behind the securities. These soured after the housing bubble burst and lost billions of dollars in value.

Bank of America said it will make cash payments of about $6.3 billion and buy securities from Fannie and Freddie worth more than $3 billion. It is one of several banks to settle with the FHFA, which announced the agreement Wednesday.

Separately, New York’s attorney general said Bank of America and its former chief executive, Kenneth Lewis, reached a $25 million settlement to end an investigation into their actions in the 2008 acquisition of Merrill Lynch.

The civil fraud lawsuit accused them of failing to disclose Merrill losses and bonuses before the deal closed. The settlement requires the bank to pay $15 million. Lewis, 67, is prohibited for three years from serving as an officer or director of a public company. He was ordered to pay $10 million.

— Associated Press

STOCKS
Game maker suffers 16% crush in shares

King Digital Entertainment, maker of the “Candy Crush” smartphone game, suffered the biggest decline of a newly listed U.S. company in more than four months even after it priced its shares at a discount to its major peers.

King’s shares dropped nearly 16 percent to end trading at $19 on Wednesday. King and shareholders Apax Partners and Index Ventures raised $500 million in the initial public offering after pricing the stock at $22.50.

At the IPO price, King was valued at $7.09 billion, which made it cheaper — relative to projected sales — than publicly traded peers including Giant Interactive Group and Zynga. That had investors betting they could profit from a quick jump in the shares once they began trading, said Jeffrey Sica of Sica Wealth Management of Morristown, N.J. Instead, concern that the popularity of “Candy Crush” will wane is weighing on the shares, he said.

The drop was the worst of any U.S. IPO since textbook renter Chegg slumped 23 percent in mid-November.

— Bloomberg News

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