The $624 million settlement between Bank of America Corp (NYSE: BAC) and investors in Countrywide Financial Corp, including New York’s pension fund, has won an initial court approval. Los Angeles-based federal district judge Mariana Pfaelzer ruled on the issue today, however, a fairness hearing will be held on final approval for the settlement which was first announced in May.
The suit, brought forth by the New York State Common Retirement Fund and five New York City pension funds, accused Countrywide CEO Angelo Mozilo and other executives allowing its underwriting standards to deteriorate to fuel growth. The lawsuit alleged that Mozilo, named in the suit, re-assured investors about the quality of the company’s mortgages while internally issuing “dire” warnings, also selling his own $140 million stake in the company.
“This settlement was reached, as I assume all settlements are, to resolve the uncertainty of continued litigation,” said Bank of America Corp (NYSE: BAC) lawyer Brian Pastuszenski. “It is by no means a concession that anything was done that violated securities law.”
Bank of America Corp (NYSE: BAC) will be responsible for $600 million of the $624 million settlement and KMPG LLP will be responsible for the remaining $24 million.
Countrywide was purchased by Bank of America Corp (NYSE: BAC) in July 2008 on the eve of the financial crisis.
Bank of America Corporation is a bank holding company, and a financial holding company. The Company is a financial institution, serving individual consumers, small and middle market businesses, large corporations and governments with a range of banking, investing, asset management and other financial and risk management products and services. Through its banking subsidiaries (the Banks) and various nonbanking subsidiaries throughout the United States and in selected international markets, it provides a range of banking and nonbanking financial services and products through six business segments: Deposits, Global Card Services, Home Loans & Insurance, Global Banking, Global Markets, Global Wealth & Investment Management (GWIM), with the remaining operations recorded in All Other. On January 1, 2009, the Company completed the acquisition of Merrill Lynch.
