Shareholder Suits Against 2 Banks Show Depth of Subprime Debacle.

And so it goes. Shareholder suits citing the subprime nightmare have been filed against both Citi and Countrywide Financial in the last month, highlighting how fiercely the storm continues to whirl on Wall Street. The November 5 lawsuit, which is seeking class-action status, against Citigroup alleges the company issued false statements regarding its financial results, according to law firm Coughlin Stoia Geller Rudman & Robbins. The suit followed Citis November 4 announcement that it would write off $8 billion to $11 billion in the fourth quarter for assets linked to subprime mortgages, losses that spurred the resignation of chairman and CEO Charles Prince. A participant in Citis retirement planabout 32 percent of the banks 401(k) plan is comprised of Citi sharesclaims the stock is an imprudent investment for the program. He says risky mismanagement caused the plan to lose well over $1.3 billion in retirement savings. Another shareholder lawsuit followed on November 7, claiming Citi officials recklessly spent billions of dollars of subprime loans leading to losses.

In mid-September, dozens of employees of Countrywide Financial Corp. announced a lawsuit in U.S. District Court in Santa Ana against CEO Angelo Mozilo and other executives for allegedly bilking them out of hundreds of millions of dollars by concealing the firms ailing health. The complaint, which also seeks class-action status, claims the managers of the Calabasas, CA-based firms 401(k) retirement accounts continued to offer Countrywide stock as an investment option and match...when the stock no longer was a prudent investment for participants retirement savings. Hagens Berman Sobol Shapiro is representing the employees. According to the lawsuit, Countrywide fostered a positive attitude toward [its] stock as an investment for the plan and did not disclose negative material information. In all three suits, employees are seeking unspecified compensatory damages and the appointment of an independent trustee ...