Mozilo finally charged with Fraud and Insider Trading

Discussion in 'Wall St. News' started by BarbaraM, Jun 4, 2009.

  1. BarbaraM


    About time! How is he gonna keep up his tan from a dark cell?

    SEC charging ex-Countrywide CEO Mozilo with fraud
    SEC charging former Countrywide CEO Angelo Mozilo, 2 other execs with civil fraud
    Marcy Gordon and Greg Risling, AP Business Writers
    On Thursday June 4, 2009, 3:44 pm EDT
    Buzz up! Print WASHINGTON (AP) -- 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.

    Mozilo has denied any wrongdoing. His attorney did not immediately return an e-mail message for comment Thursday afternoon.

    Civil fraud charges also were filed against Countrywide's former chief operating officer David Sambol and ex-chief financial officer Eric Sieracki.

    Paul Kranhold, a spokesman for Sambol, declined to comment because he hadn't seen the charges yet. An e-mail message to Sieracki's attorney, Shirli Fabbri Weiss, was not immediately returned.

    The SEC and federal prosecutors have undertaken wide-ranging investigations of companies across the financial services industry, touching on mortgage lenders, the Wall Street investment banks that bundled home mortgages into securities sold to investors, and other market players.

    The SEC's scrutiny of Mozilo's stock sales began in the fall of 2007 with an informal inquiry.

    The filing of the agency's civil lawsuit is a striking turn for Mozilo, the man who 40 years ago co-founded what grew into the nation's largest mortgage lender. He moved the company in 1969 from New York to the housing hotbed of suburban Los Angeles, guiding Countrywide through numerous boom-and-bust housing cycles.

    After the mortgage crisis hit, Calabasas, Calif.-based Countrywide was forced to cut thousands of jobs and saw its shares plummet. Its downward spiral ended in it being bought by titan Bank of America Corp. in July 2008 for about $2.5 billion. Countrywide itself is the target of multiple lawsuits related to the mortgage meltdown.

    Mozilo sold about $130 million in Countrywide stock in the first half of 2007 through a prearranged 10b5-1 trading plan. These plans, popular among corporate executives, allow a company insider to set up a program in advance for such transactions and proceed with them even if he or she comes into possession of significant nonpublic information.

    North Carolina's state treasurer, who asked the SEC in 2007 to investigate Mozilo's stock sales, raised questions about changes made to Mozilo's plan in the months before the company's stock plunged, which allowed Mozilo to significantly increase his sales of Countrywide shares.

    Mozilo had sold company shares through prior arrangements since 2004; the pace of his sales began to quicken in October 2006 when he put a new plan into effect. Mozilo has said that he did so to reduce his stake in Countrywide and diversify his personal investments in an orderly fashion before his retirement, which was slated for December 2009.
  2. Time for Mozilo to retire to the So Pacific island he bought with those hundreds of $millions!
  3. Arnie


    He should have a few Congressman as cell mates.
  4. Wow - does that mean CountryWide was a feeder-fund for the bundlers?

    So what about the bundlers?
  5. ipatent


    <a href="">Excerpts of E-Mails From Angelo Mozilo</a>

    April 17, 2006 — to Sambol concerning Countrywide's subprime 80/20 loans:

    In all my years in the business I have never seen a more toxic prduct [sic]. It's not only subordinated to the first, but the first is subprime. In addition, the FICOs are below 600, below 500 and some below 400[.] With real estate values coming down…the product will become increasingly worse. There has [sic] to be major changes in this program, including substantial increases in the minimum FICO. … Whether you consider the business milk or not, I am prepared to go without milk irrespective of the consequences to our production.