The tsunami of litigation washing over Bank of America Corp.intensified Thursday with some of the nation’s biggest institutional investors suing the bank in federal court in Los Angeles. The investors allege securities fraud by Countrywide Financial Corp., the troubled mortgage lender BofA purchased in 2008.
Plaintiffs, including the California Public Employees’ Retirement System and funds managed by BlackRock, (NYSE:BLK) T. Rowe Price Group (NASDAQ:TROW) and TIAA-CREF allege that Countrywide misled investors about its finances and lending practices.
“These prominent institutional investors made every effort to amicably resolve their claims for recovery of damages caused by the massive and pervasive fraud at
Countrywide without filing formal litigation, but were unsuccessful,” the investors’ attorney, Blair Nicholas, a partner at Bernstein Litowitz Berger & Grossmann LLP, wrote in an e-mail to Bloomberg News. The investors hope to “maximize” their returns in a jury trial, he told the news service.
The investors opted out of a $624 million settlement last year, calling it inadequate.
Charlotte-based BofA also is facing litigation over billions in mortgage-backed securities backed by faulty mortgages that investors are trying to put back onto the bank. BofA (NYSE:BAC) proposed an $8.5 billion settlement, which has prompted other investors to step forward to say that figure is inadequate.
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