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Two New York comptrollers who oversee $255 billion in retirement assets will be the lead plaintiffs in a case claiming that Countrywide Financial deceived investors.
Stephen Taub, CFO.com | US
December 3, 2007
New York State Comptroller Thomas DiNapoli and New York City Comptroller William Thompson were named the lead plaintiffs in a class-action lawsuit against Countrywide Financial, the largest U.S. mortgage lender.
The comptrollers have chosen the law firm Labaton Sucharow LLP to represent the plaintiffs.
Plaintiffs allege that Countrywide deceived them by asserting that it could easily weather the housing downturn and artificially boosting income by understating loan loss reserves, according to published reports. When the truth was revealed, the stock price plummeted, and the the state and city pension funds lost tens of millions of dollars as a result, DiNapoli claims.
"I'm pleased with the court's decision," said DiNapoli who serves as sole trustee of New York’s $154.5 billion Common Retirement Fund. "As two of the nation’s largest institutional investors, the State and City pension funds are in the best position to represent the interests of class members. Public corporations need to be held to the highest standards when it comes to transparency and disclosure of risks to their businesses. The unlawful actions and omissions by Countrywide deprived investors of the information needed to make prudent decisions."
Thompson oversees more than $110 billion in the New York City's retirement fund.
Countrywide’s stock is down about 75 percent from its high earlier this year.