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SEC charges Countrywide's Mozilo, Sambol & Sieracki in civil fraud suit

By Richard Binder

Federal regulators yesterday charged Angelo Mozilo, the former chief executive officer of mortgage lender Countrywide Financial Corp., and two other company executives with civil fraud. The Securities and Exchange Commission?s civil lawsuit, filed in federal District Court in Los Angeles, also accuses Mozilo of illegal insider trading.

"The complaint does not tell the whole story of either internal communications or the public disclosures," and the SEC?s claims about the stock sales are "without merit," Mozilo?s lawyer, David Siegel, at Irell & Manella LLP in Los Angeles, said in a statement. "The mix and risks of Countrywide?s loan portfolio and its underwriting standards were well disclosed to and understood by the marketplace."

The suit also said that David E. Sambol, former president of Countrywide, and Eric P. Sieracki, its former chief financial officer, hid from investors the high-risk nature of the loans the company was making. A lawyer for Mr. Sambol said that the SEC?s case was baseless and that it disregarded public statements Mr. Sambol made detailing the liberal lending practices at Countrywide. Mr. Sieracki?s lawyer also said that the regulator?s case had no merit. ?Mr. Sieracki did not violate any securities laws and committed no fraud on anyone,? said Nick Morgan, a lawyer at DLA Piper in Los Angeles. He added that his client did not sell shares in Countrywide and even purchased them during the period cited by the SEC.

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Full post as published by Legal Pad | LA on June 05, 2009 (boomark / email).