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Bank of America Corp. has reached a settlement with former Countrywide Financial Corp. institutional investors who decided not to join a $624 million class-action case that won court approval in February.
The terms of the accord were not disclosed in a filing in U.S. District Court for the Central District of California that was dated Monday. Countrywide’s former auditor KPMG was not part of the pact, according to the filing.
Blackrock Inc., the California Employees’ Retirement System (CalPERS) and other investors in July filed a lawsuit that alleged Countrywide and its top leaders perpetrated fraud “in a quest to triple Countrywide’s market share and enrich themselves at the expense” of investors. Bank of America acquired the former subprime lender on July 1, 2008.
Bank of America spokeswoman Shirley Norton declined to comment. CalPERS spokesman Wayne Davis said the pension fund was pleased with the agreement. Blackrock could not immediately be reached.
Since buying Countrywide, the second-largest U.S. bank has been besieged with lawsuits related to questionable loans and mortgage-backed securities issued by Countrywide during the housing boom. The $624 million pact was one of the largest class-action settlements to emerge from the financial crisis.
Bank of America’s shares fell 2.2 percent to $5.37 amid concerns of renewed regulatory constraints on the bank.
The Wall Street Journal on Tuesday reported that regulators told Bank of America’s board in recent months that they want to see more progress in complying with a 2009 memorandum of understanding requiring the bank to fix governance, risk and liquidity management issues. The bank could face a public enforcement action if it doesn’t satisfy regulators, the paper said.
Bank of America, the Federal Reserve Board and the Office of the Comptroller of the Currency declined comment.
(Reporting by Rick Rothacker in Charlotte, North Carolina; Editing by Gary Hill)