Bank of America Settles Countrywide Fraud Claims With Calpers, Investors
By Edvard Pettersson – Nov 22, 2011
Bank of America Corp. (BAC) settled securities fraud claims by a group of Countrywide Financial investors including the California Public Employees’ Retirement System that opted out of a $624 million class-action settlement last year.
A confidential settlement has been reached with all the defendants except KPMG LLP, Countrywide’s former auditor, lawyers for the plaintiffs said in a filing yesterday in federal court in Los Angeles.
Countrywide, acquired by Bank of America in 2008, was accused of misleading shareholders about its finances and lending practices. The plaintiffs, which also include funds managed by BlackRock Inc. (BLK), T. Rowe Price Group Inc. (TROW) and TIAA- CREF are the largest group of those who rejected the 2010 settlement, saying the terms were inadequate.
Shirley Norton, a spokeswoman for Bank of America, and Blair Nicholas, the lead lawyer representing the investors, declined to comment on the settlement.
The settlement leaves two other lawsuits by investors that opted out of the 2010 settlement still pending in Los Angeles federal court, one by a group of Michigan public pension funds and one by the Fresno County Employees Retirement Association. A group of Oregon funds that opted out filed a lawsuit in January in Oregon state court.
Calpers, the largest U.S. public pension fund with $227.5 billion in assets, and the other investors didn’t specify their alleged damages in the complaint filed July 28.
The 2010 settlement by Bank of America and KPMG with investors led by the New York State Common Retirement fund and five New York City pension funds was approved in February. The settlement had been revised in December to set aside $22.5 million for possible separate settlements with a total of about two dozen institutional investors that opted out.
Countrywide, based in Calabasas, California, was once the biggest U.S. residential lender, originating or purchasing about $1.4 trillion in mortgages from 2005 to 2007. The bulk of them were sold to investors as mortgage-backed securities. The company still faces securities lawsuits over those bonds.
Former Countrywide Chief Executive Officer Angelo Mozilo last year agreed to a record $67.5 million settlement to resolve U.S. Securities and Exchange Commission claims that he misled investors. The Justice Department in February ended a criminal investigation of Mozilo without bringing charges.
The case is Government of Guam Retirement Fund v. Countrywide, 11-6239, U.S. District Court, Central District of California (Los Angeles.)