Mozilo Charged; Ex-Countrywide CEO Committed Fraud Says SEC
Friday, June 5, 2009 15:19
Federal regulators charged fmr. Countrywide CEO Angelo Mozilo with fraud on Thursday. Mr. Mozilo, along with the company’s former COO David Sambol and CFO Eric Sieracki.
Robert Khuzami, an enforcement officer with the SEC, alleges that the men “deliberately misled” Countrywide shareholders.
As the mortgage industry began to decline in late 2006 and 2007, Mr. Mozilo cashed in stock options valued at $138 million — vastly expanding his wealth as he gave public assurances regarding the strength of his company.
The company originally defended Mozilo’s trades as part of a normal planned selling program. That selling program is called a 10b5-1 plan. Rule 10b5-1 was adopted by the SEC in October 2000 and allowed a means by which executives and company insiders can dispose of company shares in a predetermined, scheduled manor. The rule was enacted to protect execs from allegations of insider trading.
The problem in Mozilo’s case, however, is that he didn’t stick to the plan. According to regulatory filings, the former CEO shifted course twice in late 2006 and 2007, amid mounting signs of economic trouble ahead. Mozilo adopted a new trading plan, added a second and then revised it, allowing him to unload hundreds of thousands of additional shares before Countrywide stock went into a free fall.
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Brian Mallard says:
June 6th, 2009 at 1:27 pm
What an ugly man! He looks more like a poor farmer than a high-pay CEO. This is the reason coming to my mind why SEC charged Mozilo. He is just a small fish in the sea of recent massive financial fraud. It shows SEC doing something symbolicly. Crooks are everywhere in America. No wonder America is going down!