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Countrywide CEO To Pay $67.5M In SEC Settlement

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Countrywide CEO To Pay $67.5M In SEC Settlement

Law

Countrywide CEO To Pay $67.5M In SEC Settlement

Countrywide CEO To Pay $67.5M In SEC Settlement

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Angelo Mozilo, the former CEO of Countrywide Financial, will pay $67.5 million in penalties to settle a civil fraud suit filed by the Securities and Exchange Commission. Mozilo built Countrywide into the nation's largest mortgage lender, but it was sold to Bank of America after it ran into trouble in the subprime lending debacle. The settlement bars Mozilo from serving as an officer or director of a public company.

MARY LOUISE KELLY, host:

Angelo Mozilo, a colorful former CEO of Countrywide, has settled civil fraud charges with the Securities and Exchange Commission. He does not have to admit guilt, but he does have to pay more that $67 million. As NPR's Tamara Keith reports, the settlement come just days before a jury trial was set to start.

TAMARA KEITH: Countrywide was once the nation's largest mortgage lender and became notorious for its risky subprime loans. Mozilo and two codefendants were accused of hiding problems with the firm's loan portfolio from investors. John Coffee is a professor at Columbia Law School where he specializes in securities law. He says the SEC has been an aggressive enforcer in this case.

Professor JOHN COFFEE (Columbia Law School): They've negotiated a settlement which for an individual defendant is near a record penalty at $67.5 million.

KEITH: As part the settlement, Mozilo agrees that he will never again serve as an officer or director of a public company. In addition to the civil case, Mozilo faces a criminal investigation. It's unclear whether that case will ever result in charges, but Coffee says that had to help motivate Mozilo's attorneys to settle.

Prof. COFFEE: You can delay things up to the last minute, but eventually on the steps of the courthouse you've got to make a decision whether to try the case or settle. And I think he made the only rational decision for a potential criminal defendant in his position.

KEITH: Mozilo's codefendants are also settling, though for smaller amounts.

Tamara Keith, NPR News, Washington.

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