SEC charging ex-Countrywide CEO Mozilo with fraud

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

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 this 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

For more information on Mozilo Stock Sale Issues.

Posted by Dan Walter

Performensation: Equity Compensation for High Performance Companies.