NY expands Countrywide suit with more defendants

By Joan Gralla

NEW YORK (Reuters) -New York City and state on Friday expanded a shareholder class-action law suit filed against top U.S. mortgage lender Countrywide Financial Corp CFC.N, naming additional company officers and directors, 26 underwriters and two accounting firms as defendants.

"We will pursue every avenue to ensure that those who defrauded investors are held accountable for their actions," said New York City Comptroller William Thompson, who helps run the New York City Pension Funds.

Executives of Countrywide "cashed out to the tune of almost $700 million" while borrowers lost homes and the value of investors' shares fell sharply, Thompson said in a statement.

Thompson and New York state Comptroller Thomas DiNapoli, who oversees the New York State Common Retirement Fund, jointly announced the expansion of the lawsuit.

The New York City and state pensions in November were named as co-lead plaintiffs for the five class-action suits accusing Countrywide of inflating earnings and overstating its ability to weather the housing slump.

The two accounting firms added to the suit, which seeks to recover millions of dollars, are Grant Thornton LLP and KPMG LLP.

A Countrywide spokeswoman had no immediate comment.

The names of the Countrywide officers and directors added to the defendants' list were not released on Friday.

The list of underwriters named as defendants includes some of the world's largest investment banks.

"Countrywide's underwriters had a duty to investigate whether Countrywide was acting honestly," DiNapoli said. "Instead, the underwriters and accountants enabled Countrywide to release false statements."

The underwriters sued were: ABN Amro Inc ABNA.KA, AG Edwards & Sons, Inc. AGE.N, Banc of America Securities LLC (BAC.N), Barclays Capital Inc. (BARC.L), BNP Paribas Securities, (BNPP.PA), BNY Capital Markets, Inc. (BK.N), Citigroup Global Markets Inc. (C.N), Countrywide Securities Corporation, Deutsche Bank Securities Inc. (DBKGn.DE), Dresdner Kleinwort Wasserstein Securities Inc DRSDgd.F, Goldman, Sachs & Co. (GS.N), Greenwich Capital Markets, Inc., HSBC Securities (USA) Inc. (HSBA.L), J.P. Morgan Securities Inc. (JPM.N), Lehman Brothers Inc. LEH.N, Merrill, Lynch, Pierce, Fenner & Smith Inc. MER.N, Morgan Stanley & Co. Inc. (MS.N), RBC Capital Markets Corporation (RYTntp.TO), RBC Dominion Securities Inc., RBC Dain Rauscher Inc., Scotia Capital Inc., SG Americas Securities, TD Securities Inc. (TD.TO), UBS Securities LLC (UBSN.VX), Wachovia Capital Markets LLC and Wachovia Securities, Inc. WB.N.

(Reporting by Joan Gralla; Editing by Leslie Adler)