MINNEAPOLIS, Nov. 9, 2007 (PRIME NEWSWIRE) -- Lockridge Grindal Nauen P.L.L.P. has filed a class action suit in the United States District Court for the Central District of California against Countrywide Capital V ("CCV") (NYSE:CFC-PB), and Countrywide Financial Corporation ("Countrywide" or the "Company") (NYSE:CFC) and certain of Countrywide's officers and directors that alleges violations of Sections 11, 12 and 15 of the Securities Act of 1933, on behalf of all persons or entities who purchased the preferred stock CCV pursuant and/or traceable to the Company's Registration Statement and Prospectus (collectively, the "Registration Statement") issued in connection with its November 1, 2006 initial public offering ("IPO"), through August 9, 2007.
The Complaint alleges that on November 1, 2006, CCV completed its IPO of 52,000,000 preferred shares at $25.00 per share for estimated proceeds of $1.3 billion to CCV pursuant to the Registration Statement. The Complaint further alleges that at the time of the Offering: (i) Countrywide told investors that its lending practices were materially different from other mortgage banks because, through its experience in the mortgage lending business, the Company knew how to originate, underwrite, manage, and service loans and adequately evaluate credit risks; (ii) that Countrywide represented that its loan origination standards and procedures were "designed to produce high quality loans" and that it was different from and could do better than other mortgage companies; and (iii) that only a small percentage of the loans it originated -- approximately 10% -- were subprime loans and that Countrywide principally produced "prime" loans in accord with industry standards. However, as alleged in the Complaint, these representations were materially false as it has now been revealed that that the percentage of subprime loans was, in reality, materially higher than represented by Countrywide.
The Complaint further alleges that on July 24, 2007, Countrywide disclosed that it would record an impairment charge of $417 million and stated that the impairment charges were attributable to accelerated increases in "delinquency levels and increases in the estimates of future defaults and loss severities on the underlying loans." In addition, it is alleged that the announced provision for losses on loans held for investment was $293 million "driven primarily by a loan loss provision of $181 million on prime home equity" loans. On July 24, 2007, CCV shares declined from a closing price of $24.46 per share on July 23, 2007, to close at $23.52 per share, a decline of $0.94 per share or approximately 4%.
It is further alleged that on August 9, 2007, Countrywide filed its quarterly report for the period ended June 30, 2007 on Form 10-Q with the Securities and Exchange Commission ("SEC") that stated, in part, that "(t)he secondary mortgage markets are also currently experiencing unprecedented disruptions resulting from reduced investor demand for mortgage loans and mortgage-backed securities and increased investor yield requirements for those loans and securities ... our capacity to retain mortgage loans and mortgage backed securities is not unlimited. As a result, a prolonged period of secondary market illiquidity may reduce our loan production volumes and could have an adverse impact on our future earnings and financial condition." On August 9, 2007, CCV shares declined from a closing price on August 8, 2007 of $21.22 per share to close at $20.70 per share, a decline of $0.52 per share of approximately 2%.
If you are a member of the proposed Class, you may move the court no later than November 19, 2007 to serve as a lead plaintiff for the Class. You need not seek to become a lead plaintiff in order to share in any possible recovery.
If you have questions about the lawsuit or would like to discuss it with an attorney, please call or e-mail:
Karen H. Riebel, Esq. (khriebel@locklaw.com)
Lockridge Grindal Nauen P.L.L.P.
100 Washington Avenue South, Suite 2200
Minneapolis, MN 55401
(612) 339-6900
More information on this and other class actions can be found on the Class Action Newsline at www.primenewswire.com/ca/