BofA board $20 million settlement called inadequate

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Bank of America Corp directors, who were sued by shareholders for allegedly paying too much for Merrill Lynch & Co in 2008, must defend a proposed $20 million settlement of the claims in federal court in New York, court papers show.

Calling the settlement "grossly inadequate," lawyers in a similar Delaware case have asked P. Kevin Castel, the judge overseeing the New York matter, to order the parties agreeing to the deal to justify its terms.

Castel directed that parties submit necessary documents by May 4.

The New York Times first reported that the Delaware plaintiffs objected to the settlement in New York as inadequate.

Damages in the case could reach $5 billion, according to the plaintiffs in the case being handled in Delaware Chancery Court, the paper said.

Larry Grayson, spokesman for BofA, declined to comment on the matter.

Lawyers in the Delaware case complained that if the settlement in New York were approved, their clients' damages claims would be wiped out ahead of a scheduled October trial, the newspaper said.