Former Countrywide Execs To Stand Trial

CALABASAS, CA-The US Securities and Exchange Commission’s fraud case against Angelo Mozilo, the former CEO of locally based Countrywide Financial Corp., is heading to trial on Oct. 19 after a federal judge refused to dismiss the charges. US District Judge John Walter in Los Angeles on Sept. 16 rejected motions filed by Mozilo, the most prominent executive targeted by federal regulators over the subprime mortgage crisis, and two other defendants, Countrywide’s former president David Sambol and former chief financial officer Eric Sieracki. Walter said that the SEC had “raised genuine issues of material fact” that Countrywide’s executives made false and misleading statements or omitted certain facts relating to its lending practices—in particular, expanding its underwriting guidelines and offering riskier pay option loans, says the National Law Journal. The SEC filed its complaint last year alleging that Countrywide and its executives failed to tell investors about the risky loans it was giving out from 2005 to 2007 to borrowers with below-average credit histories. During 2006 and 2007, the suit says, as Mozilo was reassuring investors about Countrywide’s future, he sold $140 million in his own stock.