Details of the settlement couldn't immediately be determined, although defendants in SEC cases generally settle them without admitting or denying wrongdoing.
The SEC's lawsuit, filed in June 2009, also accuses former Countrywide President David Sambol and former Chief Financial Officer Eric P. Sieracki of securities fraud. It wasn't clear whether they, too, were close to settling the lawsuit.
Mozilo attorney David Siegel, Sambol attorney Walter Brown and Sieracki attorney Shirli Weiss did not return calls seeking comment. A spokesman for the SEC's enforcement division declined to comment.
Securities fraud expert John Coffee, a professor at Columbia Law School, said a settlement could help Mozilo in fighting other civil cases arising out of the Countrywide collapse.
"Any verdict in favor of the SEC would permit private plaintiffs to free ride on it and utilize those findings in their cases," Coffee said.
A settlement, on the other hand, often doesn't require a plaintiff to admit to any wrongdoing. Coffee said it would allow Mozilo to "deny everything in other litigation."
A criminal investigation of Mozilo remains open, people with knowledge of the probe said. If the SEC case is settled, federal prosecutors will not see how the evidence against Mozilo plays out in a civil trial — which could factor into their decision on whether to bring charges. Criminal charges carry a higher standard of proof.
October 15, 2010
E. Scott Reckard of the LA Times, who was a leader in reporting on the SoCal-centric subprime scandals, reports that Angelo Mozilo, former boss of Countrywide Financial, is trying to settle with the Securities & Exchange Commision without admitting wrongdoing before his civil trial on stock fraud charges starts Tuesday:
My reading of the history of the Housing Bubble is that Mozilo was something of a prime mover among corporate tycoons in that his attempt to push Countrywide's share of the mortgage market from 10% to 30% was a key factor. He wasn't just responding to the market, he had a strategic plan to push the market. The only way to get there was to take risks on marginal borrowers.
There were always marginal firms in that business, but Mozilo wasn't an obvious crook, fool, moonshooter, or small-timer. He'd had a good business record helping build a huge business, but when his boss David Loeb stepped down and Mozilo moved up to CEO, he was overenthusiastic.
My impression is that Mozilo was fairly sincere in thinking these marginal borrowers had been underestimated.
Still, some nine figure fines and some jail time for some big names would help get the incentives less out of whack. The latter is really the only thing that can get through to financiers. Everybody figures the government can't take all your money away, you can always sock enough of it away to live on in luxury, but jail time gets people's attention.
By Steve Sailer on 10/15/2010