I don't usually highlight every class action pendency filed these days against a publicly-held or traded financial or mortgage industry firms, but a press release today caught my eye -- a California-based law firm is suing a Countrywide securitization trust, Countrywide Capital V, for securities fraud.
From the press statement
The Complaint alleges that CCV's Registration Statement and Prospectus contained material misstatements and omissions. At the time of the offering, Countrywide was suffering from adverse factors, which were not properly disclosed. In particular, the Registration Statement and Prospectus failed to disclose Countrywide's exposure to massive losses caused by its subprime lending practices. Such matters were causing a material adverse affect on Countrywide's business at the time of CCV's November 1, 2006 offering. According to Countrywide's recent statements, these matters will continue to affect its business going forward.
Certain of the adverse factors affecting Countrywide's business were first revealed on July 24, 2007, when the Company forecast a weak second half of 2007 due to adverse market conditions, which caused the price of the Capital Securities to decline from $24.46 on July 23, 2007 to $20.85 on July 31, 2007. As the Company continued to issue negative developments, the price of the Capital Securities continued to fall to just $13.85 on August 16, 2007, the end of the Class Period.
This is interesting, regardless of merit, because it is a potential investor class action against a securitization trust; and it's the first such attempt I've seen in this area. Sort of an instance of investors potentially biting the hand the feeds.
I would expect more such claims will be making the rounds in the next few months -- again, without commenting on the merit of any such case -- but wanted HW readers to be aware of where the class action attention is liekly to be headed next.