Ex-Countrywide shareholders: Public policy dictates we can sue Mozilo

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Ex-Countrywide shareholders: Public policy dictates we can sue Mozilo

Ex-Countrywide shareholders: Public policy dictates we can sue Mozilo

The Government could and should have sued him and won!


Alison Frankel:

In 2008, plaintiffs’ lawyers were so close to lassoing onetime Countrywide chairman Angelo Mozilo in a derivative suit that they could practically smell his aftershave. The housing market had crashed, new details of Countrywide’s dubious underwriting were emerging every day and the mortgage lender’s shares had plummeted from $45 to $5. Shareholders in a consolidated derivative suit before U.S. District Judge Mariana Pfaelzer had survived a motion to dismiss their claims against Countrywide’s directors and officers and were headed into discovery.

You know what happened next: Bank of America acquired what remained of Countrywide. And that was the end of the derivative suit against the Countrywide board, according to a December 2008 ruling by Pfaelzer, who found that the old Countrywide shareholders didn’t have standing to sue because the stock-for-stock BofA deal extinguished their stock ownership.

[REUTERS ON THE CASE]

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