Oct. 31 (Bloomberg) -- Countrywide Financial Corp. shareholders sued Chief Executive Officer Angelo Mozilo and 19 other company officers and directors, claiming a stock buyback program allowed them to sell shares at inflated prices.

The defendants sold $842 million in company stock while issuing false and misleading statements about the financial health of Countrywide, the biggest U.S. mortgage lender, the New England Teamsters and Trucking Industry Pension Fund alleged in a complaint filed Oct. 29 in Los Angeles Superior Court.

Countrywide shares have dropped 62 percent this year amid what Mozilo has called the worst housing market since the Great Depression. The company had to tap $11.5 billion in emergency credit in August after cash ran short. Mozilo, who has sold more than $280 million of Countrywide shares over the past two years, has said he's facing an informal Securities and Exchange Commission inquiry into stock sales.

Mozilo and the other ``defendants caused Countrywide to engage in unlawful business practices and to disseminate false and misleading statements to the public while simultaneously using more than $2 billion of Countrywide's assets to prop up the price of Countrywide stock via a share repurchase plan,'' the pension fund said in the complaint.

The fund accuses the company's officials of insider selling and breach of their fiduciary duty to both the company and shareholders. They seek unspecified damages.

Countrywide spokesman Rick Simon didn't immediately return a call seeking comment.

Shares of the Calabasas, California-based lender fell 42 cents to $15.52 in New York Stock Exchange composite trading.

The case New England Teamsters and Trucking Industry Pension Fund v. Angelo Mozilo, Los Angeles County Superior Court, BC379944.

To contact the reporter on this story: Edvard Pettersson in Los Angeles at epettersson@bloomberg.net.

Last Updated: October 31, 2007 17:11 EDT