New York, NY —
New York's state and city pension funds have announced a nearly $630 million settlement with Countrywide and its accounting firm KPMG.
The New York State Common Retirement Fund and five city pension funds were lead plaintiffs in a class-action suit against Countrywide, one of the country's largest mortgage lenders, which was acquired by Bank of America in 2008.
In the class action lawsuit, the funds claimed Countrywide and auditor KPMG made misstatements about lending practices, artificially inflating the price of its securities ahead of the housing market collapse. If approved by the court, the settlement would be one of the largest securities fraud settlements in U.S. history.
City Comptroller John Liu says he hopes the settlement will bolster public confidence in the financial markets.
"It also seeks to remind executives that actions cannot be taken at the expense of shareholders and the public to enrich their own pockets," Liu says.
Liu says the city's five pension funds lost $5 million when Countrywide's stock collapsed in early 2008.
Countrywide denies all allegations of wrongdoing. The company said it agreed to this settlement to avoid the additional expense and uncertainty associated with continued litigation.