boston.com Business your connection to The Boston Globe

Countrywide workers sue over retirement benefits

LOS ANGELES - A lawsuit filed against Countrywide Financial Corp. on behalf of its employees claims the mortgage lender failed to warn them about the depth of its financial troubles, resulting in heavy stock losses in their 401(k) retirement accounts.

The lawsuit, filed Tuesday in US District Court in Santa Ana, Calif., seeks class-action status and names as defendants Countrywide chairman and chief executive Angelo Mozilo and benefits committee members in charge of the retirement plan.

Countrywide has struggled as the housing slump led to a sharp rise in mortgage defaults and foreclosures, particularly among subprime borrowers or those with weak credit. The company last week said it would cut as many as 12,000 jobs.

The lawsuit claims plan managers "continued to offer Countrywide stock as an investment option and match in Countrywide stock when the stock no longer was a prudent investment for participants' retirement savings."

The suit claims the retirement plan lost hundreds of millions of dollars. It seeks unspecified compensatory damages and the appointment of an independent trustee to manage the plan.

The plan held around $349.9 million in Countrywide stock as of Dec. 31, according to a company filing with the Securities and Exchange Commission cited in the lawsuit. The holdings amounted to about 33 percent of the plan's total assets, the lawsuit said.

A call to Countrywide was not immediately returned.

Countrywide shares declined 26 cents to $16.62.

More from Boston.com

SEARCH THE ARCHIVES