LOS ANGELES (CN) – Shareholders have brought a class-action complaint against Countrywide Home Loans CEO Angelo Mozilo and Bank of America, claiming Mozilo is selling his beleaguered company too cheaply to BofA, on grossly unfair terms. They also object that BofA will provide legal defense for Mozilo and his cohorts.
That group faces “hundreds of millions, if not billions, of dollars of personal liability” from class-action and derivative lawsuits, accordnig to the suit. Shareholders say it’s unfair the the defendant directors pocketed $540 million by dumping their own shares, while shareholders were soaked for $2.1 billion in a single day when Countrywide’s misconduct was revealed.
Plaintiffs claim BofA snapped up Countrywide at the “bargain basement price” of 0.1822 shares of BofA stock for each Countrywide share. They claim Countrywide directors harmed the company by their risky lending practices, while pumping up the stock through false and misleading statements and unjustly enriching themselves by dumping their own shares at inflated prices.
They claim these defendant directors each profited by this much by dumping shares “before the misconduct was revealed:” Mozilo, $450.5 million; Henry G. Cisneros, $5.6 million; Jeffrey M. Cunningham, $3 million; Robert J. Donato, $5.5 million; Oscar P. Robertson, $10.2 million’ David Sambol, $57.8 million; and Harley W. Snyder, $9 million.
In other words, the complaint states, the defendant directors reaped more than $500 million in illicit gains, and when Countrywide’s misconduct was revealed on July 24, 2007 and the share price fell by $3.56 that day, shareholders lost more than $2.1 billion.
They want the terms of sale rescinded, including any accompanying termination fees, and they want them enjoined :from consummating an acquisition tied to extracting indemnity agreements, unless and until the Company adopts and implements a fair procedure or process that does not unfairly advantage defendants at the expense of Countrywide shareholders.”
Lead counsel in Superior Court is Coughlin Stoia Geller Rudman & Robbins.