Countrywide Financial Corp. (2010)
Lead Plaintiff Deadline: Apr 2, 2010 + Deadline passed
Summary of Case:
A securities class action has been filed against Countrywide Financial Corp. (2010) on behalf of all persons or entities who purchased or otherwise acquired (1) Alternative Loan Trust Certificates issued by, inter alia, defendant CWALT, Inc. ("CWALT"); (2) CWABS Asset-Backed Trust Certificates issued by, inter alia, defendant CWABS, Inc. ("CWABS"); (3) CHL Mortgage Pass-Through Trust Certificates issued by, inter alia, defendant CWMBS, Inc. ("CWMBS"); and (4) CWHEQ Revolving Home Equity Loan Trusts and Home Equity Loan Trusts issued by, inter alia, defendant CWHEQ, Inc. ("CWHEQ") (collectively referred to as the "Certificates"). The case has been filed in the United States District Court for the Central District of California.
The complaint alleges that Defendants issued the Certificates pursuant or traceable to the following registration statements ("Registration Statements") filed with the U.S. Securities and Exchange Commission ("SEC"): 333-110343, 333-100418, 333-118926, 333-117949, 333-121249, 333-125164, 333-123167, 333-125963, 333-131591, 333-125902, 333-131662, 333-135846, 333-131630, 333-140958, 333-140960, 333-140962, 333-121378, 333-126790, 333-132375, 333-139891. The Certificates were then sold to Class members pursuant to certain prospectuses ("Prospectus Supplements"), which also were filed with the SEC and incorporated by reference into the Registration Statements. More information about the Registration Statements and Certificates, including details of the individual Prospectus Supplements involved in this action, is contained in pages 13 through 52 of the complaint. The complaint charges that the Registration Statements and Prospectus Supplements issued in connection with the Certificates contained materially false and misleading statements and omitted material information in violation of Sections 11, 12(a)(2) and 15 of the Securities Act.
Specifically, Countrywide Financial Corp., and its wholly owned subsidiary, Countrywide Home Loans, Inc. (collectively "Countrywide"), certain officers and directors of CWALT, CWABS, CWMBS and CWHEQ, and certain investment banks, which served as underwriters of the Certificates, violated the Securities Act by issuing the Certificates pursuant to Registration Statements and Prospectus Supplements that misrepresented the quality of the underlying mortgages that had been pooled and placed in the issuing trusts. The complaint alleges various misrepresentations and omissions as to the underwriting practices employed in originating the mortgages, the sufficiency of the collateral and the appraisal practices used to support the mortgages. As a result of the material misrepresentations and omissions in the Registration Statements and Prospectus Supplements, investors purchased securities that were far riskier than represented.
By mid-2007, the mortgages held by the Issuing Trusts and underlying the Certificates began suffering accelerating delinquencies and defaults. The defaults led to real estate foreclosures, which revealed that the properties underlying the mortgages were worth materially less than the loans issued to the borrowers, and the borrowers did not have sufficient financial wherewithal to cover the outstanding mortgage balances. The representations made in the Company's Prospectus Supplements were materially false and misleading because at the time of the Certificates offerings, Countrywide's underwriting standards were not designed to evaluate a borrower's ability to repay or the true value of the mortgaged property underlying the Certificates. These adverse factors were not revealed and/or adequately addressed in the offering documents.
Defendants could have - and should have - discovered the material misstatements and omissions in the Company's Prospectus Supplements prior to their filing with the SEC and distribution to the investing public. Instead, they failed to do so as a result of a negligent and inadequate due diligence investigation. Had plaintiffs and the other members of the Class known the truth, they would not have purchased the Certificates, or they would not have purchased them at the inflated prices that were paid.
If you purchased this company's shares during the Class Period and suffered a loss or for further information about the case, please review the links below.