Countrywide Financial Corp., some of its former executives, its underwriters and an auditor failed again to win dismissal of a securities lawsuit brought by investors.

In an order filed April 6, Judge Mariana Pfaelzer of the U.S. District Court for the Central District of California in Los Angeles denied most requests to dismiss the allegations by the New York State Common Retirement Fund, the lead plaintiff.

The New York fund, representing other investors who bought Countrywide debt securities, says the Calabasas mortgage company, which Bank of America Corp. acquired in July, hid the fact that its growth was fueled by deteriorating underwriting standards.

A spokeswoman for B of A would not discuss the ruling.

Pfaelzer dismissed insider-trading claims against David Sambol, Countrywide's former president, Eric Sieracki, its former chief financial officer, and Stanford Kurland, another former president. The judge ruled that the executives sold shares according to plans that were not "unusually modified."

Investors can proceed with claims against Angelo Mozilo, Countrywide's former chairman and chief executive, for shares he sold after Oct. 26, 2006, when he made "unusual" changes in his plan, Pfaelzer said.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.