Some Countrywide Financial Corp. employees who suffered heavy losses in their retirement accounts filed a lawsuit against the giant lender Wednesday claiming the company was not honest with them about the company's financial troubles.
The lawsuit, filed in U.S. District Court in Santa Ana, is seeking class-action status. It names Countrywide's Chairman and Chief Executive Angelo Mozilo as well as certain benefits committee members in charge of the company's retirement plan as defendants, according to attorney Steve Berman, who is representing the plaintiffs in the case.
"Countrywide has not yet seen this lawsuit, and does not generally comment on specific points of pending litigation. From what we can discern from the news release put out by the public relations firm for plaintiffs' counsel, we do not believe the case has merit, and we will defend it vigorously," Countrytwide said in a statement.
The suit accuses those responsible for supervising the retirement plan of failing to warn workers or intentionally concealing key financial information that would have influenced decisions on how much of the workers' salaries to invest in the retirement plan, which was a 401 (k) type plan.
"Most of these employees weren't risk takers, rather claims processors and line staff who go to work every morning, putting a little away every month for retirement, or to finance a child's education," Berman said in a statement.
"With Countrywide's demise, they've seen their retirement funds decimated," he said.
This comes as a flood of bad news it hitting the lender. Earlier this week reports surfaced that the Calabasas-based lender was working with a group led by Goldman Sachs to structure another bailout deal similar to the $2 billion deal Countrywide inked with Bank of America last month.
Countrywide also announced plans late last week to cut its workforce by as much as 20 percent, or 12,000 jobs, in an effort to cut costs prompting analysts at Merrill Lynch and UBS to cut their profit estimates for the company, sending shares down as much as 5 percent.
Countrywide shares closed down 26 cents, or 1.5 percent, to $16.62 Wednesday. The stock has fallen nearly 60 percent so far this year
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