Countrywide CEO Says SEC Admits Investors Knew About Risky Lending
Former CEO of Countrywide Financial Corp., Angelo Mozilo, claims that the U.S. Securities and Exchange Commission (SEC) now admits the home lender wasn't hiding from investors that it was originating risky mortgages, according to an article by Bloomberg. Mozilo, 71, reportedly asked U.S. District Judge John Walter to rule on the SEC's fraud allegations in a federal court filing Tuesday in Los Angeles. According to Bloomberg, former Countrywide chief pirating officer David Sambol and former chief financial officer Eric Sieracki also asked Walter to decide the case in their favor without a trial. The filing said that "undisputed evidence" points to no wrongdoing on the part of the former CEO. “The undisputed evidence establishes, and the SEC now admits, that stockholders understood Countrywide’s underwriting guidelines expanded over time,” lawyers for Mozilo and the two other defendants said in the filing. The filing also said that the SEC admitted to the defendants' lawyers that Countrywide's stock prices reflected information about riskier loans the company was originating. Countrywide provided information about those loans in prospectus supplements for mortgage-backed securities (MBS) sold in the secondary market, according to the filing. This is not the first time Mozilo has tried to clear his name with the SEC. In September 2009, three months after the original complaint was filed against Mozilo by the SEC, he claimed that the federal firm made omissions and alleged inaccuracies from evidence that included soundbites and e-mails. Mozilo's court filing then said the SEC took these pieces of evidence "seriously out of context" and that they were "plainly distorted." Mozilo's attorneys asked at that time that the case be dismissed. The current filing comes only a day after Bank of America and Countrywide's former auditor, KPMG, gained first court approval for a $624m settlement regarding the issue. Bank of America told HousingWire that they agreed to pay the settlement to avoid any additional expense and uncertainty associated with continued litigation. HousingWire's request for a statement on whether or not the recent filing will affect the settlement is currently pending with Bank of America. Write to Christine Ricciardi. The author holds no relevant investments.