Federal Judge OKs Countrywide Suit

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A federal judge rejected requests by Countrywide Financial Corp. to dismiss a shareholder lawsuit against executives and directors of the lender, and on Wednesday said that the case should go to trial.


Los Angeles District Judge Mariana Pfaelzer agreed with a handful of public pension funds in finding that witnesses’ accounts of Countrywide’s business practices were worth looking at.


Pfaelzer said several witnesses gave persuasive testimony of Countrywide’s business practices, including allegations that the Calabasas-based company rewarded employees for boosting loan volume rather than for generating quality loans.


Chief Executive Angelo Mozilo and 13 other current and former top executives and board members are named in the suit and are being accused of failing to provide oversight of the lender as well as intentionally misleading shareholders about the company’s financial health.


Countrywide asked the court to dismiss the case, in part on the grounds that the pension funds did not have legal standing because they had not shown they consistently held stock in the company.


Countrywide is in the process of being bought by Charlotte-based Bank of America Corp. for about $4 billion in stock.


Shares in Countrywide were down 3.3 percent to $4.69 in early trading Thursday.

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