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BofA's $8.5 billion mortgage settlement upheld by appeals court

A Bank Of America sign is pictured in the Manhattan borough of New York August 21, 2014. REUTERS/Carlo Allegri

By Karen Freifeld and Jonathan Stempel

NEW YORK (Reuters) - Bank of America Corp's proposed $8.5 billion settlement with investors in mortgage-backed securities has upheld by a New York state appeals court.

In a ruling on Thursday, the Manhattan appellate court said the bond trustee, Bank of New York Mellon Corp , did not abuse its discretion in negotiating the settlement.

The court also said it approved the settlement "in all respects."

Bank of America struck the deal in 2011 with 22 institutional investors in toxic securities issued by Countrywide Financial Corp, the mortgage lender the bank acquired at the height of the financial crisis.

Those investors include BlackRock Inc Allianz SE's Pimco and Metlife Inc.

(Reporting By Karen Freifeld; Editing by Lisa Von Ahn)