Judge Refuses to Dismiss Countrywide Shareholder Suit
A California federal judge has refused to dismiss a shareholder lawsuit against directors and officers of Countrywide Financial Corp.
Judge Mariana Pfaelzer ruled Tuesday that confidential witness accounts cited in the complaint were credible and suggested “a widespread company culture that encouraged employees to push mortgages through without regard to underwriting standards,” the New York Times reports.
Pfaelzer wrote that shareholders’ “allegations create a cogent and compelling inference that the individual defendants misled the public with regard to the rigor of Countrywide’s loan origination process, the quality of its loans and the company’s financial situation,” the Wall Street Journal reports (sub. req.).
Countrywide also faces a shareholder suit in Delaware that challenges executive compensation and suits by borrowers and by buyers of its mortgage-backed securities.
