CNN Money is reporting Countrywide workers sue over retirement plan.
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. The lawsuit claims Countrywide employees lost millions of dollars in retirement savings. It seeks unspecified compensatory damages.
A call to Berman seeking further comment was not returned.
A call to Calabasas-based Countrywide was also not returned.
Is this another one of those unfortunate consequences of reaping what one sows? For those who missed it, here is Part 1: Countrywide Reaps What It Sowed.
However you feel about it, employees and companies both ought to have known better especially in the wake of the collapse of Enron. Simply put, it is often a serious mistake to put your retirement basket heavily in the stock of the company where you are employed. If you voluntarily do so, a company failure of any kind may cost you your job as well as a significant portion of your retirement. This is a very tough lesson to learn the hard way, especially for the innocent bystanders who did not realize what Countrywide was doing.
Mike Shedlock / Mish/