Three public pension plans opted out of a federal class-action lawsuit against Bank of America’s Countrywide Financial and filed separate cases claiming the firm misled investors into buying risky securities.
The $47.5 billion Michigan Retirement Systems, East Lansing, Mich., filed suit Jan. 26 in U.S. District Court in Los Angeles, against Countrywide, a number of company executives and more than a dozen investment firms and banks. The Michigan lawsuit seeks $65 million in damages for a “risky scheme to artificially inflate earnings,” the complaint states.
Joy Yearout, spokeswoman, for Michigan Attorney General Bill Schuette, who filed the suit on behalf of the pension system, declined to comment on why it opted out of the class action.
Oregon Investment Council, Salem, Tigard, which filed a lawsuit against Countrywide in Oregon state court Jan. 26, opted out of the class action because it would have compensated Oregon less than $500,000 for the $14 million in losses, including $13 million for the pension fund, allegedly caused by Countrywide, said James Sinks, spokesman for the council, which oversees the $56.7 billion Oregon Public Employees Retirement Fund, Salem.
Fresno County (Calif.) Employees’ Retirement Association also filed a separate lawsuit against Countrywide on Jan. 26 in U.S. District Court in Los Angeles. Roberto Pena, administrator, could not be reached for comment by press time.
Six other pension plans that also opted out of the class action — including CalPERS and the Florida State Board of Administration — have not decided whether to file a new lawsuit together or individually, said Blair A. Nicholas, partner with the law firm of Bernstein Litowitz Berger & Grossmann, who represents 16 plaintiffs that had opted out of the class action.
In addition to the $228.5 billion California Public Employees’ Retirement System and $152.2 billion FSBA, the plans are the $94.9 billion Texas Teacher Retirement System, $1.5 billion Government of Guam Retirement Fund, $36 billion Maryland State Retirement & Pension System and Montana Board of Investments, which manages $7.4 billion in pension fund assets.
“It is unfortunate that select investors chose to opt out of a fair and equitable agreement to settle these issues. We intend to vigorously defend these claims,“ Bank of America spokesman Lawrence Grayson wrote in an e-mailed request for comment.