$600M Countrywide Securities Settlement Approved

Los Angeles, CA: A federal judge has approved a $601.5 million settlement of a class-action suit against Countrywide Financial Corp. The settlement is reportedly one of the largest class-action settlements stemming from the subprime mortgage crisis.

Filed in 2007, the suit alleged that Countrywide, now part of Bank of America Corp., misled investors about its financial condition and lending practices, failing to disclose the extent of subprime loans it held.

However, more than 30 investors, including large institutional shareholders such as the California Public Employees' Retirement System, Teachers Retirement System of Texas and BlackRock Investment Management LLC, said in October they were opting out. That, in turn, allowed Bank of America to opt out of an earlier settlement in which it would have paid $600 million whild KPMG LLP - Countrywide's former auditors, would have had to pay $24 million.

Some reports indicate that there may be further opt-outs by institutional investors while other opt-out investors, including funds belonging to the states of Oregon and Michigan and retirees from Fresno, California, have already sued Bank of America separately.

About 970 institutional investors held stock in Countrywide during the period covered by the lawsuit.

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Published on Mar-1-11