Bank of America (NYSE:BAC) Credit Default Swap Suit Reversed

Bank of America (NYSE:BAC) had a lawsuit reinstated against them in reference to paying out a credit default swap of $18 million.

The case was based upon when Merrill Lynch (before BofA acquired them) sold DKR Soundshore Oasis Holding Fund Ltd credit default protection against Urban Corp. In 2008 Urban restructured debt and Oasis let Merrill know that it had happened, and asked for payment under the swap agreement.

Merrill said at the time the notice was inadequate and a lower court and the judge agreed. A five-judge panel of the New York State Supreme Court, Appellate Division reversed the decision, saying the notice only needed to be "reasonably" precise in detail.

They said, "Even an inaccuracy would not necessarily invalidate a credit event notice as long as it could subsequently be shown that a credit event had in fact occurred."