Court OKs $624M Payout to Countrywide Investors
February 28, 2011 (Associated Press) LOS ANGELES - A federal judge on Friday approved a $624 million settlement in a lawsuit brought by several New York public pension funds against fallen mortgage giant Countrywide Financial Corp.
The settlement, a version of which was had been originally hammered out last year, also calls for KPMG, Countrywide's accounting firm, to pay $24 million of the total.
In their lawsuit, the New York State Common Retirement Fund and five New York public pension funds claimed that Countrywide hid how risky its business had become during the housing market's boom years.
It's not immediately clear how much the New York funds or other Countrywide investors will receive, New York City Law Department spokeswoman Connie Pankratz said late Friday.
Still, New York officials touted the deal, calling it one of the largest securities fraud settlements in U.S. history.
"This settlement vindicates investors who were deceived by Countrywide's involvement in sub-prime mortgage lending," Thomas P. DiNapoli, New York state comptroller, said in a statement.
The settlement approved by U.S. District Judge Mariana Pfaelzer in Los Angeles wasn't good enough for some Countrywide investors, however.
Some 33 large institutional investors that held shares in the lender decided to opt out of the settlement and pursue claims separately, said Blair Nicholas, an attorney representing 16 of the institutional investors, including the California Public Employees' Retirement System, BlackRock Inc., American Century and T. Rowe Price.
"My clients, if they can't resolve their claims with Countrywide directly, then they're fully committed to try our case before a jury and maximize the recovery of our damages," Nicholas said.
Some $22.5 million of the settlement was set aside for up to two years toward future claims by investors who opted out of the deal.
Calabasas-based Countrywide was once the nation's largest mortgage lender. It was acquired by Bank of America in 2008.
A call seeking comment from Bank of America, which is based in Charlotte, N.C., was not immediately returned late Friday.