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Fraud charge for Countrywide boss | Fraud charge for Countrywide boss |
(31 minutes later) | |
Angelo Mozilo, former boss of Countrywide Financial, has been charged with civil fraud and insider trading by the Securities and Exchange Commission. | Angelo Mozilo, former boss of Countrywide Financial, has been charged with civil fraud and insider trading by the Securities and Exchange Commission. |
He is the highest profile executive to face charges relating to the US sub-prime mortgage crisis in 2007. | He is the highest profile executive to face charges relating to the US sub-prime mortgage crisis in 2007. |
Bank of America eventually rescued the biggest US mortgage lender, buying it for $2.5bn (£1.5bn) in July 2008. | Bank of America eventually rescued the biggest US mortgage lender, buying it for $2.5bn (£1.5bn) in July 2008. |
Mr Mozilo has denied doing anything wrong. Two other former executives have also been charged with civil fraud. | Mr Mozilo has denied doing anything wrong. Two other former executives have also been charged with civil fraud. |
Former chief operating officer David Sambol and former chief financial officer Eric Sieracki "misled the market by falsely assuring investors that Countrywide was a prime quality mortgage lender that had acoided the excesses of its competitors", the SEC alleged. | |
It added that Mr Mozilo had deliberately misled investors about the credit risks that the company was taking. | |
'Flying blind' | |
The SEC also said that he had made nearly $140m in profit from selling his Countrywide shares "based on non-public information". | |
The sub-prime crisis, which was caused by mortgages being given to people who could not really afford them. | |
The loans were then repackaged by banks and sold on to investors, made to look like low-risk investments. | |
The SEC published extracts from e-mails sent by Mr Mozilo. | |
"The bottom line is that we are flying blind on how these loans will perform in a stressed environment of higher unemployment, reduced values and slowing home sales," he wrote on 26 September 2006. |