BoA Settles with Countrywide Plan Participants for $55M

August 11, 2009 ( - Bank of America Corp., which acquired Countrywide Financial Corp. in 2008, will pay $55 million to settle a class-action lawsuit by employees who were enrolled in Countrywide's 401(k) plan prior to the acquisition.

Bloomberg reports that lawyers for the employees said in April that an agreement in principle had been reached in the 2007 class action,alleging violations of the Employee Retirement Income Security Act (ERISA). A request for preliminary approval was filed in federal court in Los Angeles, and a hearing on the request is scheduled for August 31.

The employees of the mortgage company filed a suit in a federal court in Santa Ana, California, saying the 401(k) plan suffered steep losses after news of the company’s tumultuous financial status prompted a drop in stock prices (see Countrywide Financial 401(k) Plan Participants Sue Over Plan Losses ). Countrywide matched employee contributions with company stock.

The case is Vincent Alvidres v. Countrywide Financial Corp., 07-05810, U.S. District Court, Central District of California (Los Angeles).

Countrywide was hit with a number of shareholder lawsuits by pension funds around the country prior to its acquisition by Bank of America (see Pension Funds Can Proceed with Suit against Countrywide ), and a Bank of America employee sued the bank following the acquisition saying it left BoA exposed to “toxic” subprime mortgage-related assets. (see Stock Drop Suit Hits BoA over Countrywide, Merrill Deals ).