The SEC has charged former Countrywide Financial CEO Angelo Mozilo with insider trading fraud. Mozilo’s charged with making $140 million selling company stock while telling investors that everything was hunky dory. And the feds appear to have a smoking gun: an email. When will they learn?
According to the Washington Times:
According to the SEC, Countrywide told investors that it dealt mostly in stable mortgages when it actually dealt mainly in risky subprime mortgages. SEC said the Countrywide executives knew its reliance on the subprime market was a business model likely to fail.
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, Mr. Mozilo wrote in an email to another executive, according to the SEC.
Three other current and former Countrywide executives were also charged in the complaint, and the Justice Department is reportedly exploring criminal charges against the company.
When will they learn? Email evidence has figured prominently in a number of high-profile investigations, including the conflict of interest investment banking saga at Citigroup and the Justice Department’s case against Microsoft that embarassed the hell out of Bill Gates.
Not that it took superhuman insight, but back in March, I pegged Mozilo as one of those responsible for the financial crisis:
Angelo Mozilo. Cofounder, chairman and CEO (until 2008) of Countrywide Financial - the nation’s largest mortgage lender until its collapse. Also cofounded mortgage investment bank IndyMac. The poster child for predatory lending practices. Provided favorable mortgage financing to politicians under the “Friends of Angelo” program.
Still, for the feds to prosecute, they needed evidence that an actual crime was committed. In the case of Mozilo and Countrywide, they may have found it. But with respect to the financial crisis brought about by the sub-prime housing mess, I’m betting this is the first of many dominoes to fall. Who will be next? Your guess is as good as mine, but here’s a list of likely suspects.
