Sept. 12 (Bloomberg) -- Countrywide Financial Corp., the mortgage lender that said it will cut its workforce by 20 percent, was sued by employees claiming the company withheld information about its financial health and caused the value of their retirement plan to drop.

Countrywide, the biggest U.S. mortgage lender, said last week it would eliminate as many as 12,000 jobs after investors stopped buying loans and bankers, alarmed by rising subprime defaults, refused to provide capital to mortgage companies. Countrywide's stock declined more than 60 percent this year.

The company's workers asked for class-action status, the right to sue as a group, in a complaint filed yesterday in Santa Ana, California. They also sued Chief Executive Officer Angelo Mozilo and Chief Administrative Officer Marshall Gates.

``Defendants failed to conduct an appropriate investigation into whether Countrywide stock was a prudent investment for the plan'' and ``failed to provide the plan's participants with information regarding Countrywide's improper activities,'' the employees said in their complaint.

Countrywide, based in Calabasas, California, hasn't seen the complaint, according to a statement e-mailed by spokesperson Jumana Bauwens. ``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,'' Countrywide said in the statement.

Stock Plunged

About one-third of the retirement plan's holdings were company stock, according to the complaint. The employees suffered ``hundreds of millions'' in losses when Countrywide's stock plunged, they said.

``I think the record is crystal clear that the CEO knew this company was highly risky, that it was engaging in risky behavior and that this was no longer a prudent investment,'' Steve Berman, a lawyer for the plaintiffs, said in an interview. Berman said about 50,000 people are invested in Countrywide's retirement plan.

Countrywide fell 26 cents, or 1.54 percent, to $16.62 in New York Stock Exchange composite trading.

The case is Cruz v. Countrywide Financial, CV-07-1050, U.S. District Court, Central District of California (Santa Ana).

To contact the reporter on this story: Carlyn Kolker in New York at ckolker@bloomberg.net.

Last Updated: September 12, 2007 18:44 EDT