By Reynolds Holding
NEW YORK, Sept 11 (Reuters Breakingviews) - A U.S. court
says shareholders lost the right to sue on the mortgage lender's
behalf after it was sold to BofA. That squelches one way to hold
the likes of ex-CEO Mozilo to account. And it's a reminder to
litigious stock owners to cover all their bases sooner rather
Full view will be published shortly.
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- Former shareholders of Countrywide Financial lost their
right to sue directors on the mortgage lender's behalf after its
2008 takeover by Bank of America (BAC.N), the Delaware Supreme
Court ruled on Sept. 10. The court said the shareholders could
not pursue a so-called derivative action because relinquishing
their shares in the acquisition meant they no longer had legal
- Delaware law includes an exception to that rule when the
sole purpose of a transaction is to shield officers and
directors from liability and deprive shareholders of the power
to sue. But the court decided that the Countrywide investors
didn't qualify, even though alleged wrongdoing by the board may
have made the BofA acquisition necessary.
- The court opinion was issued at the request of the U.S.
Court of Appeals in San Francisco, which is hearing the
shareholders' appeal of their lawsuit's dismissal and needed an
interpretation of Delaware law, which governs the question of
the investors' standing.
- Court opinion: link.reuters.com/caq92v
Regulator rising [ID:nL1N0FW0S2]
Two's company [ID:nL1E9CH7J3]
(The author is a Reuters Breakingviews columnist. The
opinions expressed are his own.)
- For previous columns by the author, Reuters customers can
click on [HOLDING/]
(Editing by Antony Currie and Martin Langfield)
Keywords: BREAKINGVIEWS COUNTRYWIDE/
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