$624 Million Proposed Settlement Announced In Countrywide Securities Class Action

$624 Million Proposed Settlement Announced In Countrywide Securities Class Action

LOS ANGELES — (Mealey’s) The lead plaintiffs in a consolidated class action complaint against former subprime mortgage lending giant Countrywide Financial Corp. (CFC) and others for alleged violations of federal securities laws announced a $624 million proposed settlement May 7 (In re Countrywide Financial Corp. Securities Litigation, No. 07-5295, C.D. Calif.).

New York State Comptroller Thomas D. Napoli, on behalf of the New York State Common Retirement Fund and New York City public pension funds, said in a May 7 press release that under the proposal, CFC would separately pay plaintiffs $600 million and the accounting firm KPMG would pay $24 million.  The combined recovery would be one of the largest securities fraud settlements in U.S. history, Napoli said.

The settlement will go before U.S. Judge Mariana R. Pfaelzer of the Central District of California for preliminary approval.  Afterward, all class members will be notified, and a final approval hearing will be scheduled.

The plaintiffs allege that CFC, its subsidiaries, certain of its former executive officers, directors and members of the board of directors, underwriters and outside auditors violated of Sections 10(b), 20(a) and 20A of the Securities Exchange Act of 1934, Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 and Securities and Exchange Commission Rule 10b-5 in connection with alleged misrepresentations made by the defendants concealing CFC’s exposure to the subprime mortgage lending crisis.

[Editor's Note:  Full coverage will be in the May issue of Mealey’s Emerging Securities Litigation.   For all of your legal news needs, please visit www.lexisnexis.com/mealeys.]
 
For more information, call editor Dylan McGuire at 610-205-1114, or e-mail him at Dylan.McGuire@lexisnexis.com.

Download the original complaint.