Del. court rejects former Countrywide shareholders

AP News
Posted: Sep 10, 2013 5:12 PM

DOVER, Del. (AP) — The Delaware Supreme Court says former Countrywide Financial shareholders can't pursue a federal lawsuit filed against leaders of the mortgage lender before its 2008 acquisition by Bank of America.

Acting on a request by a federal appeals court in California, the justices confirmed Tuesday that a "fraud exception" in Delaware law doesn't allow for the revival of a 2007 federal lawsuit. This exception to the Delaware law has never been applied.

The law requires continuous ownership of a company's stock for shareholders to pursue claims on behalf of a company, usually against officers and directors. But the shareholders didn't have that — a California judge had ruled that the 2008 acquisition eliminated the Countrywide shareholders' standing to pursue their lawsuit because they no longer had an ownership interest in Countrywide.