NY pension funds say $600 million settlement proposed in lawsuit against Countrywide Financial

Friday, May 7, 2010

NY pension fund: $600M settlement with Countrywide

ALBANY, N.Y. — New York pension fund officials said Friday they’ve reached a proposed $600 million settlement of securities fraud allegations against mortgage lender Countrywide Financial Corp.

The settlement is subject to approval by a federal judge and isn’t expected to be final until September.

New York Comptroller Thomas DiNapoli said the deal covers claims that Countrywide made misstatements about its lending practices, artificially inflating the price of its securities ahead of the national housing collapse in 2007.

The state’s retirement fund and five New York City public pension funds sued to recover investment losses.

“This is a very good settlement that helps repair the damage Countrywide has done to our fund,” said DiNapoli, the sole trustee of the state fund. “It also serves notice to the marketplace that we will vigorously protect the fund and our members from abuse.”

A spokeswoman for Bank of America, which took over Countrywide in 2008, confirmed the proposed settlement.

In a prepared statement, the company denied any wrongdoing, saying “the information that plaintiffs contended was not disclosed to investors had in fact been disclosed in multiple ways.” It cited disclosures made by Countrywide at investor forums and in filings with regulators.

A spokesman for Countrywide’s auditor, the accounting firm KPMG, confirmed it would pay $24 million as part of the settlement.

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