BANK of America Corp was ordered by a US judge to return $500m (£314.1m) of deposits it seized from Lehman Brothers Holdings shortly after Lehman’s record bankruptcy.
US Bankruptcy judge James Peck said Bank of America violated federal law when it “brazenly” seized the deposits, after having taken advantage of Lehman’s weakened condition in the summer of 2008 in obtaining the money.
“It is difficult to understand how Bank of America could have thought that taking the money was the right thing to do without first seeking permission from the court,” Peck wrote in a opinion filed in Manhattan bankruptcy court.
“The actions taken were surprising and, quite frankly, disappointing for a leading financial institution that should care a great deal about its reputation,” he wrote.
The decision is a victory for Lehman as it tries to repay creditors still owed hundreds of billions of dollars following its 15 September 2008 bankruptcy.
Peck directed Lehman to draft an order calling for the return of the $500m plus interest, and for the parties to meet to discuss “the amount of any further monetary award.”