Friday, January 25, 2008

Countrywide Fraud Suit Expands To 26 More Financial Services Firms

Dow Jones Newswires, 25 January 2008

The New York City Comptroller, New York State Comptroller and New York City Pension Funds expanded the consolidated class-action lawsuit against Countrywide Financial Corp. (CFC) and others to include 26 financial services companies that underwrote Countrywide's stock and bond offerings.

The expanded suit also named two global accounting firms and additional Countrywide officers and directors who signed Securities and Exchange Commission filings that allegedly contained false and misleading information about Countrywide's business and finances.

"As borrowers lost their homes and investors held onto artificially inflated securities, Countrywide executives cashed out to the tune of almost $700 million," said state comptroller Thomas P. DiNapoli. "We will pursue every avenue to ensure that those who defrauded investors are held accountable for their actions."

The class-action suit alleges that Countrywide, Calabasas, Calif., misstated and omitted information regarding its lending practices and other business information, resulting in the artificial inflation of its stock price. The suit also claims the company issued stock and bonds based on SEC filings that contained false information.

The expanded suit includes ABN Amro Inc., A.G. Edwards & Sons Inc., Banc of America Securities LLC, Barclays Capital Inc., BNP Paribas Securities Corp., BNY Capital Markets Inc., Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Dresdner Kleinwort Wasserstein Securities Inc., Goldman Sachs & Co., Greenwich Capital Markets Inc., HSBC Securities (USA) Inc., J.P. Morgan Securities Inc., Lehman Brothers Inc., Merrill Lynch & Co., Morgan Stanley & Co., RBC Capital Markets Corp., RBC Dominion Securities Inc., RBC Dain Rauscher Inc., Scotia Capital Inc., SG Americas Securities, TD Securities Inc., UBS Securities LLC., Wachovia Capital Markets LLC, Wachovia Securities Inc., Grant Thornton LLP and KPMG LLP.