U.S. District Judge Mariana Pfaelzer in Los Angeles ruled today on the accord. A fairness hearing will be held on final approval for the settlement, first announced in May.
The New York State Common Retirement Fund and five New York City pension funds claimed former Countrywide Chief Executive Officer Angelo Mozilo and other executives hid the fact that the company was fueling its growth by letting underwriting standards deteriorate. Bank of America acquired Calabasas, California- based Countrywide, the biggest U.S. home lender, in July 2008.
“This settlement was reached, as I assume all settlements are, to resolve the uncertainty of continued litigation,” Brian Pastuszenski, a lawyer for Bank of America, said at the hearing. “It is by no means a concession that anything was done that violated securities law.”
Mozilo, 71, is also a defendant, together with two other former Countrywide executives, in a U.S. Securities and Exchange Commission lawsuit alleging he publicly reassured investors about the quality of the company’s home loans while he issued “dire” internal warnings and sold about $140 million of his own Countrywide shares.
Joel Bernstein, a lawyer for the New York funds, said at the hearing that the settlement represents about 22 percent of the maximum possible recovery the plaintiffs could have expected if the case had gone to trial.
Bank of America, based in Charlotte, North Carolina, is responsible for $600 million of the settlement, with New York- based KPMG responsible for the remaining $24 million.
The case is In re Countrywide Financial Corp. Securities Litigation, 07-05295, U.S. District Court, Central District of California (Los Angeles).