Employees of Countrywide Financial Corp., Calabasas, Calif., have lost millions of dollars in 401(k) assets as the value of the companys stock dwindled due to its alleged illegal actions, according to the law firm of Hagens Berman Sobol Shapiro, which filed a class-action suit against Countrywide Wednesday. From Oct. 27, 2005, through Aug. 16, the company provided its matching contribution as company stock, which has lost three-fourths of its value since January amid the subprime lending fallout. The stock closed today at $16.62.
The suit claims that employees participating in the 401(k) plan relied on information supplied by the company, its CEO and other plan fiduciaries in making the decision to contribute to the plan, according to the law firms statement.
The suit seeks the return of money lost, the creation of a constructive trust on any amount by which the defendants were unjustly enriched and the appointment of an independent fiduciary to help manage the companys stock.
A statement from the company said: Countrywide has not yet seen this lawsuit, and does not generally comment on specific points of pending litigation. From what we can discern from the news release put out by the public relations firm for plaintiffs counsel, we do not believe the case has merit, and we will defend it vigorously. Countrywide believe(s) our 401(k) program is properly structured and provides competitive benefits to employee participants."
Steve Berman, the attorney representing the plaintiffs, was not available by press time.
Countrywides 401(k) plan had $1.1 billion in assets as of Dec. 31, according to an SEC filing.