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  • September 12, 2007 at 2:23 PM #10263
    lonestar2000
    Participant

    http://money.cnn.com/2007/09/12/real_estate/countrywide_employee_suit.ap/index.htm?postversion=2007091213

    Countrywide workers sue over retirement plan
    The mortgage lender’s employees say the value of retirement accounts plummeted by millions as the company’s stock fell.
    September 12 2007: 1:43 PM EDT

    LOS ANGELES (AP) — Some Countrywide Financial Corp. employees sued the mortgage lender Wednesday, claiming they suffered heavy losses in their 401k retirement accounts after the company failed to warn them about the depth of its financial troubles.

    The lawsuit, filed in U.S. District Court in Santa Ana, 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, according to attorney Steve Berman, who is representing the plaintiffs.

    He said employees decided how much of their salary to set aside in their retirement plan based in large part on their understanding of the company’s financial health.

    But those overseeing the plan failed to warn workers or intentionally concealed key information, the lawsuit claims.

    “Most of these employees weren’t risk-takers, rather claims processors and line staff who go to work every morning, putting a little away every month for retirement, or to finance a child’s education,” Berman said in a statement.

    “With Countrywide’s demise, they’ve seen their retirement funds decimated,” he said.

    Countrywide said to eye another bailout
    A call to Berman seeking further comment was not returned.

    The lawsuit claims Countrywide employees lost millions of dollars in retirement savings. It seeks unspecified compensatory damages.

    A call to Calabasas-based Countrywide was also not returned.

    Countrywide has been struggling as the housing slump led to a sharp rise in mortgage defaults and foreclosures, particularly among borrowers with subprime loans.

    Countrywide (down $0.41 to $16.47, Charts, Fortune 500) shares fell 2.3 percent by midday Wednesday on the New York Stock Exchange. Its shares plunged from a 52-week high of $45.26 in January to a low of $15 in mid-August.

    September 12, 2007 at 2:29 PM #84315
    stansd
    Participant

    This isn’t news…happens pretty much every time a stock plummets if there is any chance of misdeeds causing the plunge.

    Stan

    September 12, 2007 at 2:38 PM #84317
    Diego Mamani
    Participant

    It’s really idiotic to tie both your job and retirement savings to the fortunes of one single company. Stan is right, this was done by Enron employees too, who appeared in front of a judge, crying and saying that “we don’t understand no risk diversification of them investments”.

    Frivolous lawsuit!

    September 12, 2007 at 2:41 PM #84319
    lendingbubblecontinues
    Participant

    This is Enron all over again…here’s hoping Mozilo makes a trip up to Colorado soon!

    September 12, 2007 at 3:16 PM #84330
    LostCat
    Participant

    After they lose their lawsuit, I know of some land out along I-10 about a hundered miles east of Palm Desert near Parker Az for sell. I am sure it would a great long term investment to put all their money into.

    Losers.

    September 12, 2007 at 3:30 PM #84335
    waterboy
    Participant

    Maybe Playboy will do a “Women of Countrywide” issue

    September 12, 2007 at 3:51 PM #84339
    davelj
    Participant

    Actually, that’s not a bad idea. There are a lot of hot, formerly employed mortgage brokers out there. Like the drug sales profession, the mortgage broker profession tends to draw in a lot of hot women.

    September 12, 2007 at 4:59 PM #84346
    donaldduckmoore
    Participant

    Is that considered insider information if the company notifies the employees of any problems in advance? Remember Martha Stuart?

    September 12, 2007 at 5:18 PM #84353
    Diego Mamani
    Participant

    Now I remember that our friend Leatherface (the CEO) said a few days or weeks ago that he knew the bubble would burst. Remember how he unloaded his company stock in 2006 and early 2007? Well, perhaps this lawsuit is not entirely frivolous. He’s admitted he knew the party (the housing orgy, if you will) would end soon, and he cashed out, but the little people in his firm were left holding the bag.

    September 12, 2007 at 6:37 PM #84366
    The-Shoveler
    Participant

    Nor_LA-Temcu-SD-Guy

    I don’t know anything really, but I work next to two big CoutryWide offices in Calabasas, I took a walk to the market to buy a lotto ticket a little while ago, over heard a few people standing outside one of the offices saying something big was up for tomorrow. They were all (like) Drive safe home now and the like.. Very sad it seemed.

    Maybe it’s nothing who knows …

    September 12, 2007 at 6:51 PM #84367
    CostaMesa
    Participant

    Diego – I have to apologize in advance if this sounds needlessly harsh…but I think that it’s still valid nonetheless.

    If employees that are heavily invested in their own company don’t pay attention when the CEO dumps his stock, then it’s hard to feel too bad for them. The writing is on the wall clearly, in USGovt approved disclosures.

    Maybe I’m just a not-nice person, but I don’t feel sorry for someone who gets themself into a jam when they have no business being where they were in the first place.

    Any, and I mean ANY, investment tv_show-book-magazine-whatever will counsel that diversification is likely to be the best hedge against risk. For anyone to be heavily invested in their own public corporation is a risk that noone advises.

    Caveat emptor!

    September 12, 2007 at 7:06 PM #84368
    Mr_Brightside
    Participant

    I’m sure there are some folks out there that fit this profile:

    Made a lot of money selling mortgages on 100% commission

    Bought properties figuring the market would double; easy money.

    Maxed out 401(k) plan as a means of trying to shelter some of the income.

    Roll forward to Fall 2007

    Commission income dried up

    Properties in a tailspin

    401(k) plan in ruin

    This has got to hurt.

    September 12, 2007 at 7:46 PM #84373
    one_muggle
    Participant

    Actually, that’s not a bad idea. There are a lot of hot, formerly employed mortgage brokers out there. Like the drug sales profession, the mortgage broker profession tends to draw in a lot of hot women.

    How about prostitution?
    I can see the Ad now: Get SCREWED by your mortgage broker… Again! (except this time it’s cheaper)

    -one muggle

    September 12, 2007 at 8:03 PM #84374
    Coronita
    Participant

    I would have to agree with Diego, and Costa Mesa on this. I've said this numerous times, most recently on another posting about CFC a few days ago.

    http://piggington.com/countrywide_mozilo_letter_explaining_layoffs

    quote :

    I'm sure you're also going to have all the former countrywide employees screaming bloody murder when there stock/options are worthless, and there 401k which they elected to buy company stock tanks., just like enron employees. Of course no one complains when things are going up.

    Sorry, if folks don't diversify and get burned, it's no one else's fault but themselves. Case in point, I'm 70% long equities. And when,if a recession hits, I'm not going to be blaming anyone if I take it in the shorts. Or, maybe I should ask for a bailout too.

     

     

     

     

    This lawsuit is all too predictable.

    Here's typically what happens.

    1)Company offers 401k plan with the options to buy company stock

    2)Employees sees company stock run up.

    3)Beyond buying espp shares, having stock options, employee buys stock in 401k plan.

    4)Stock keeps going up, employees are estatic and dream of riches. Does not sell any espp shares, does not exercise in the money options, does not sell 401k plan purchases.

    5)Stock tanks because of some event. Employees get canned, stock options worthless, espp shares underwater, 401k shares decimated

    6)Screwed employees screw bloody murder, blames company for not properly "educating" them about diversification. Of cousre they don't read the espp prospectives, nor the 401k prospectives, nor anything else that is available to them. They consider themselves "victims".

    7)Lawsuits started, "victims" testify in front of a judge wailing about how they lost a lot of money

    8)No real settlement is reached, and even if so, most of it goes to the lawyers.

     

    One problem that all these employees always have when they see there stock go up. GREED. No one complains when things are going up crazy. But someone always has to pay when the stock tanks.

    You would have thought people would have learned their lesson from Enron, WorldCon, Adelphia, Lucent, Nortel, etc,etc,etc,etc,etc. Of course, "this time it's different".

     

    September 12, 2007 at 8:05 PM #84375
    Coronita
    Participant

    Nor_LA-Temcu-SD-Guy

    I don't know anything really, but I work next to two big CoutryWide offices in Calabasas, I took a walk to the market to buy a lotto ticket a little while ago, over heard a few people standing outside one of the offices saying something big was up for tomorrow. They were all (like) Drive safe home now and the like.. Very sad it seemed.

    Maybe it's nothing who knows …

     

    Perhaps the execution of the 20,000+ layoffs??? 

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