Press Releases
Press Office
(518) 474-4015


January 25, 2008

DiNapoli, Thompson: State And City Pension Funds
Expand Securities Fraud Suit

Twenty-six Underwriters, Two Accounting Firms Listed as Defendants

New York State Comptroller Thomas P. DiNapoli, New York City Comptroller William C. Thompson, Jr. and the New York City Pension Funds today announced the expansion of the consolidated class action lawsuit filed against Countrywide Financial Corporation and other defendants. The expanded suit will include 26 different financial services companies that underwrote Countrywide stock and bond offerings, two global accounting firms, and additional Countrywide officers and directors who signed SEC filings that contained false and misleading information about Countrywide’s business and finances.

“Countrywide’s underwriters had a duty to investigate whether Countrywide was acting honestly,” DiNapoli said. “Instead, the underwriters and accountants enabled Countrywide to release false statements. Investors lost millions, and New Yorkers lost their homes. We can’t sit idly by; we need to recover the pension fund’s losses and find a way to help all those families. This class action suit is the first step.”

“The actions of Countrywide and its underwriters created a situation in which, when the company’s stock and bond prices fell, it was investors, and not the company’s executives, that sustained heavy losses,” Thompson said. “As borrowers lost their homes and investors held onto artificially inflated securities, Countrywide executives cashed out to the tune of almost $700 million. We will pursue every avenue to ensure that those who defrauded investors are held accountable for their actions.”

Countrywide Financial Corp., based in Calabasas, California, is one of the nation’s largest home mortgage lenders. The class action alleges that Countrywide’s material misstatements and omissions regarding its lending practices, and other aspects of its business and finances, artificially inflated the price of the company’s securities. When the truth was revealed, stock and bond prices plummeted and investors lost money. The class action also alleges that Countrywide issued stock and bonds based on SEC filings that contained false information.

By expanding the suit, the plaintiffs seek to ensure that the underwriters and accounting firms who participated in the marketing of Countrywide securities to the public are held accountable for their actions. The suit also seeks to hold Countrywide officers and directors who signed false and misleading SEC filings accountable.

DiNapoli and Thompson believe that the New York State Common Retirement Fund and the New York City Pension Funds lost millions of dollars as a result of misleading statements and factual misrepresentations by Countrywide. On November 28, 2007, United States District Judge Mariana R. Pfaelzer of the United States District Court for the Central District of California named DiNapoli and the New York City Pension Funds as co-lead plaintiffs in the class action suit.

Labaton Sucharow LLP, a firm with extensive experience in large securities fraud cases, is lead counsel.

The expanded suit includes the following companies:

  • ABN AMRO Incorporated
  • A.G. Edwards & Sons, Inc.
  • Banc of America Securities LLC
  • Barclays Capital Inc.
  • BNP Paribas Securities Corporation
  • BNY Capital Markets, Inc.
  • Citigroup Global Markets Inc.
  • Countrywide Securities Corporation
  • Deutsche Bank Securities Inc.
  • Dresdner Kleinwort Wasserstein Securities Inc.
  • Goldman, Sachs & Co.
  • Greenwich Capital Markets, Inc.
  • HSBC Securities (USA) Inc.
  • J.P. Morgan Securities Inc.
  • Lehman Brothers Inc.
  • Merrill, Lynch, Pierce, Fenner & Smith Inc.
  • Morgan Stanley & Co. Incorporated
  • RBC Capital Markets Corp.
  • RBC Dominion Securities Inc.
  • RBC Dain Rauscher Inc.
  • Scotia Capital Inc.
  • SG Americas Securities
  • TD Securities Inc.
  • UBS Securities LLC
  • Wachovia Capital Markets LLC
  • Wachovia Securities, Inc.
  • Grant Thornton LLP

About the Common Retirement Fund
The $154.5 billion New York State Common Retirement Fund is the third largest public pension plan in the United States with more than one million members, retirees and beneficiaries from state and local governments. Comptroller DiNapoli is the sole trustee of the fund and manages a diversified portfolio of public and private equities, fixed income, real estate and alternative instruments.

About the New York City Pension Funds
The five New York City Pension Funds - which collectively hold more than $110 billion in assets - are the: New York City Employees' Retirement System, Teachers' Retirement System for the City of New York, New York Fire Department Pension Fund, New York City Police Pension Fund and the Board of Education Retirement System. Thompson serves as investment advisor to the funds.


Albany Phone: (518) 474-4015 Fax: (518) 473-8940
NYC Phone: (212) 681-4840 Fax: (212) 681-7677