SEC Charging Ex-Countrywide CEO Mozilo With Fraud

Source: ABC News/AP

SEC charging former Countrywide CEO Angelo Mozilo, 2 other execs with civil fraud

The government is charging Angelo Mozilo, the former chief executive of mortgage lender Countrywide Financial Corp., and two other company executives with civil fraud.

The Securities and Exchange Commission's case also accuses Mozilo of illegal insider trading, an agency spokesman said Thursday.

Countrywide was a major player in the subprime mortgage market, the collapse of which in 2007 touched off the financial crisis that has gripped the U.S. and global economies.

Mozilo is the most high-profile individual to face formal charges from the federal government in the aftermath of the crisis.

Read more: http://abcnews.go.com/Business/wireStory?id=7758400

That's what I'm expecting.

Source: Reuters

LOS ANGELES/WASHINGTON (Reuters) - Angelo Mozilo, who built the largest U.S. mortgage lender, was charged with securities fraud and insider trading on Thursday, making him the most prominent defendant in investigations into the U.S. subprime mortgage crisis and housing bust.

The U.S. Securities and Exchange Commission said Mozilo, 70, co-founder of Countrywide Financial Corp and poster boy for the U.S. mortgage meltdown, made more than $139 million in profits in 2006 and 2007 by exercising 5.1 million stock options and selling the underlying shares.

The SEC said in its civil lawsuit, filed in Los Angeles on Thursday, that in one instance, the day before he set up a stock trading plan on September 25, 2006, Mozilo sent an email to two Countrywide executives that said: "We are flying blind on how these loans will perform in a stressed environment of higher unemployment, reduced values and slowing home sales."

Those executives, then Countrywide President David Sambol, 49, and Chief Financial Officer Eric Sieracki, 52, were charged by the SEC with knowingly writing "riskier and riskier" subprime loans that they had a limited ability to sell on the secondary mortgage market.

Countrywide was ground zero in the mortgage and housing industry meltdown that built up momentum from late 2006 and has cost U.S. banks hundreds of billions of dollars -- if not trillions -- in credit losses and writedowns.

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Credit losses experienced by Countrywide in 2007 were foreseen as early as 2004, the SEC claimed in the lawsuit.

Read more: http://www.reuters.com/article/businessNews/idUSTRE5536Q620090605?feedType=RSS&feedName=businessNews&sp=true