(LoanSafe.org) – Yet another multimillion dollar Countrywide Financial lawsuit has been settled. The New York State Common Retirement Fund and five New York City public pension funds announced the $624 million settlement last week with Countrywide Financial Corporation as a result of a securities class action lawsuit.
The lawsuit was filed by the pension funds because they alleged that Countrywide had violated securities laws by making misstatements and omitting pertinent facts about its policies and procedures for underwriting mortgages that had much greater risk than what was originally disclosed. The investors claim that Countrywide had exposed their funds to excessive an undisclosed risk.
The New York State Common Retirement Fund provides benefits for over one million state and government employees. It is the third largest public pension fund in the U.S. also includes police officers and firefighters.
The gargantuan settlement details that plaintiffs will receive $600 million from Countrywide and the accounting firm, KPMG would pay $24 million. Under the proposed settlement, Countrywide would separately pay plaintiffs $600 million and the accounting firm, KPMG would pay $24 million, making the combined recovery one of the largest securities fraud settlements in U.S. history. This may turn out to be the 13th largest securities class action lawsuit under the Private Securities Litigation Reform Act.
“It’s my job to protect the interests of the Fund and the one million members who rely on its strength and security,” said State Comptroller Thomas P. DiNapoli, sole trustee of the State pension fund. “This is a very good settlement that helps repair the damage Countrywide has done to our Fund and the other members of the Class. It also serves notice to the marketplace that we will vigorously protect the Fund and our members from abuse.”
“Countrywide’s actions have improperly enriched executives at the expense of shareholders,” said City Comptroller John C. Liu, who serves as a trustee of four of the five City Public Pension Funds and is investment advisor to all five Funds. “This historic settlement sends a strong message that this behavior is unacceptable in Corporate America, and that management will be held accountable to shareholders, especially when they put self-interest before shareholders’ interests.”
“We are gratified to have waged this fight not only for New York City, but also for hundreds of thousands of people nationwide who suffered financial losses,” said Corporation Counsel Michael A. Cardozo, chief legal officer for the City of New York and counsel to the City’s pension funds. “The improper behavior of Countrywide and its senior executives put at risk the pensions that retired firefighters, police officers and teachers depend on for their livelihood.”
“We are extremely pleased withthis outstanding recovery for investors who incurred losses by reason of the type of conduct that we believe has adversely affected our financial system and caused widespread damage to our economy. Countrywide’s singular effort to overtake its competitors and capture a dominant share of the nation’s residential loan market, was the impetus for one of the largest cases to enforce securities laws in recent years. We are very pleased with this result that will help to compensate investors,” said Labaton Senior Partner Joel Bernstein.
