Allstate sues Countrywide over toxic investments

Allstate Corp. has filed a federal lawsuit against Countrywide Financial Corp. over $700 million in toxic mortgage-backed securities that the insurer bought beginning in 2005, only to see their value decline rapidly.

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In October, Mozilo agreed to a $67.5 million settlement with the SEC to avoid trial on civil fraud and insider trading charges that alleged he profited from doling out risky mortgages while misleading investors about the risks. Under terms of the settlement, Mozilo and two other Countrywide executives did not admit wrongdoing.

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In 2008, Bank of America reached an $8.4 billion settlement with 12 states in 2008 over Countrywide's lending practices. The company also agreed in August to pay $600 million to end a class-action case from former Countrywide shareholders.