Countrywide CEO settles with SEC

Angelo Mozilo agrees to pay $67.5 million to settle civil fraud charges with the SEC stemming from the subprime mortgage crisis. Two other executives also settle.

By Charley Blaine Oct 15, 2010 3:03PM
Former Countrywide Financial Chief Executive Angelo Mozilo agreed today to pay $67.5 million in financial penalties to settle the Securities and Exchange Commission's high-profile civil fraud suit against him.

Countrywide was once the nation's largest mortgage lender but ran into deep trouble when it started making thousands of subprime mortgages that went bad. The company was sold to Bank of America (BAC) in 2008 and renamed Bank of America Home loans.
Mozilo, who helped found the company in 1969, was charged with selling shares in the company without disclosing the company's rapidly declining financial health.

The two other defendants in the case, former Countrywide President David Sambol and former Chief Financial Officer Eric Sieracki, also settled with the SEC.

Sambol agreed to pay just over $5.5 million in penalties while Sieracki agreed to pay $130,000.

The settlements, whose likelihood was first reported in The Wall Street Journal Thursday, came only days before the start of a jury trial in federal court here on the case.

As is typical of a settlement, all three defendants, who reached the settlements without admitting or denying wrongdoing, also agreed to injunctions against future violations of securities law.

Additionally, Mozilo agreed to a permanent ban on serving as an officer or a director of a public company. Sambol agreed to a three-year ban.

Of Mozilo's total, $22.5 million was in civil penalties and $45 million in disgorgement, or potential returns to investors. Of Sambol's total, $5 million represented such repayments.

In a suit filed last year, the SEC accused the three defendants of hiding from the public growing problems in Countrywide's portfolio of risky loans.

Those problems eventually led to Countrywide's sale to Bank of America in 2008.

Bank of America wasn't involved in the SEC suit, but is paying the entirety of Sambol's $5 million disgorgement, The Journal said.

It couldn't be immediately determined whether Bank of America would be covering any of Mozilo's $45 million in disgorgement. The SEC also accused Mozilo of insider trading in his sale of nearly $140 million of Countrywide stock.

The SEC's Countrywide case is one of the biggest federal enforcement actions to yet surface out of the 2008 meltdown of the nation's financial markets. The settlements were disclosed at a court hearing here Friday before Judge John Walter, who was presiding over the case.

The case was go to trial on Tuesday, and settlement talks  heated up this week.

The trio had a good reason to settle: A lengthy trial held the potential for surfacing information that could be damaging to three men in relation to the criminal probe, observers told The Journal today.

Losing the SEC cases could influence a possible future criminal jury and also hurt their efforts to defend private civil suits brought in the wake of Countrywide's woes.

2Comments
Oct 15, 2010 7:43PM
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that frikkin moziloasshole should be frikken :waterboarded, like his ------- bed partners bushy and dick-da-**** cheney!!!!!!!!!!!!!!!!!!!!!!! those three stooges should be hung!!!!!!!!!!!!!!!! got it????? i thought so folks!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!Disappointed

Oct 15, 2010 5:14PM
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Mozilo, who helped found the company in 1969, was charged with selling shares in the company without disclosing the company's rapidly declining financial health.

Something is very wrong with this result.   Why arent they going after the Congress that pushed them into the SUBPRIME market, or seized the company and along with Fannie/Freddie turned them over to someone that can communicate with mortgage holders and solve the problem without crashing the world economies???

 

Me thinks SEC is protecting the Obama-ites who were paid off by  campaign donations from Fannie/Freddie!!!

 

HARRUMPH!!!

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