Mergers and Litigation

A U.S. district court judge in California has assigned New York state Comptroller Thomas P. DiNapoli and New York City Comptroller William C. Thompson as lead plaintiffs in the consolidated class action lawsuit filed against Countrywide Financial Corp., which is accused of inflating its stock price through material misstatements and omissions on its lending practices. DiNapoli, who serves as sole trustee of New York’s $154.5 billion Common Retirement Fund believes this fund and the New York City Pension Fund “lost tens of millions of dollars” as a result of Countrywide’s actions. The comptrollers chose Labaton Sucharow LLP to serve as lead counsel, DiNapoli’s office announced.

“As two of the nation’s largest institutional investors, the state and city pension funds are in the best position to represent the interests of class members,” DiNapoli’s said in the announcement. “Public corporations need to be held to the highest standards when it comes to transparency and disclosure of risks to their businesses. We believe that unlawful actions and omissions by Countrywide deprived investors of the information needed to make prudent decisions.“

Walid A. Chammah’s and James P. Gorman’s roles as co-presidents of Morgan Stanley became effective Saturday, the investment firm announced Thursday, noting co-president Zoe Cruz retired after 25 years of service.

As part of the announcement, Morgan Stanley reiterated that its disclosures early last month reflect the full extent of its direct subprime-related exposure, as of Oct. 31, and that its warning remains on that actual impact could fluctuate based on market conditions throughout November. The company had said it expected to write down $3.7 billion of its U.S. subprime assets in its fourth quarter, which ended Friday.

But CNBC television reports have said Cruz was ousted from the position as a result of the subprime woes and that mortgage-related write downs could be as much as $5.7 billion.

On Tuesday, TierOne Bank and MidCountry Bank asked a Florida court to dismiss the involuntary Chapter 11 bankruptcy case against TransLand Financial Services because TransLand had agreed to sell off mortgage loans and liquidate other assets, and distribute the proceeds to creditors. The two banks, along with Federal Trust Bank, initially tried forcing TransLand into bankruptcy in August on allegations involving TransLand failing to remit collections on loans that were paid off. A trial in the case, which was scheduled for Thursday, was canceled.

The court has yet to approve the deal, according to documents filed with the U.S. Bankruptcy Court Middle District of Florida.

New York Mortgage Trust Inc. announced it will issue $20 million of convertible preferred stock to JMP Group Inc. and affiliates. Proceeds from the deal, expected to close within 30 days, will be used to finance purchases of agency mortgage-backed securities and other mortgage- related investments. As a result of the investment, James J. Fowler, a JMP managing director, will become non-executive chairman of New York Mortgage.

SCBT Financial Corp. announced Friday it completed acquiring TSB Financial Corp., a deal that expands SCBT’s presence in Charlotte and other North Carolina communities. TSB’s The Scottish Bank will continue to operate under its name in the Charlotte market.

First Citizens Banc Corp is a step closer in purchasing Futura Banc Corp. with the Federal Reserve Board’s announcement Friday of its approval of the proposed merger. The deal between the two Ohio-based entities must be consummated by next March.