NEW YORK — Several large institutional investors have rejected a court settlement where Countrywide Financial Corp. had agreed to pay $600 million to a number of national pension funds.
Those pulling out of the agreement include BlackRock Inc.; the California Public Employees Retirement System, or Calpers; T. Rowe Price Group Inc.; Nuveen Investments Inc.; and the Maryland State Retirement and Pension System, according to a document from the suit filed in U.S. District Court in Los Angeles.
The investors decided the settlement, initially agreed to last May, wasn't enough and will seek their own terms with the mortgage originator and its current owner Bank of America Corp., as well as Countrywide's auditor KPMG LLP. KPMG had committed another $24 million to the settlement.
A spokesman for New York State Comptroller Thomas P. DiNapoli, who represented the massive New York State Common Retirement Fund in the litigation, said the fund intends to remain part of the "very reasonable settlement." Ola Fadahunsi, the spokesman, noted the comptroller's office is "very happy" with the work of its counsel on the case.
Shirley Norton, a Bank of America spokeswoman said, "It is unfortunate that some investors chose to opt out of what we believe is a fair and equitable agreement to settle these issues."
KMPG declined to comment.
The settlement agreement, which is facing a final approval hearing before a federal judge in Los Angeles Friday, was amended last month as a result of the investors leaving. The new agreement, which remains at a total of $624 million, now includes a provision that allows Countrywide and KPMG to take up to $22.5 million of that amount to pay the investors who rejected the agreement. The amount must be used within two years.
Blair A Nicholas, a lawyer representing some of the largest institutional investors to pull out of the agreement, including BlackRock, Calpers and T. Rowe, said his clients "exercised their legal right to opt out in order to maximize the recovery" of their damages.
"If our clients are unable to resolve their claims to recovery, they are fully committed to pursuing their claims at trial to hold Countrywide's former executives fully accountable for the pervasive fraud at Countrywide," Nicholas said.
The Los Angeles Times had
The lawsuit alleged Countrywide made false statements and omissions about its policies and procedures for underwriting loans, exposing investors to excessive undisclosed risk.
According to the court document, 33 investors, including names of some individuals, were withdrawing. Some of these investors include Montana Board of Investments, Teacher Retirement System of Texas, Oregon Public Employees Retirement Fund, and the Michigan State Treasurer, on behalf of several public pension funds in the state.
