SEC closing in on Mozilo

The Daily Journal is reporting that the former CEO of Countrywide Financial and possibly other high-ranking former executives could soon face civil fraud charges. SEC lawyers in Los Angeles are developing a case that tries to show how company executives, including Angelo Mozilo, misled shareholders about the true condition of Countrywide’s credit risks. Central to the investigation, according to the paper, are Countrywide's allegedly relaxed lending standards. Sorry, no link, but here’s a snippet:

About a month ago, lawyers for Mozilo and his successor David Sambol both received phone calls offering a final opportunity to make their case with SEC staff who are investigating the matter. The offers, informally known as "pre-Wells" notices, can be precursors to actual "Wells notices," formal written letters from the SEC notifying individuals that formal charges will be recommended to the Commission. A final decision on whether to file charges could take at least two months, the sources said, and the executives' lawyers could have another opportunity to meet with the commissioners before the decision is made. Another Countrywide executive, former chief financial officer Eric Sieracki, is also facing close scrutiny by the SEC, according to the sources familiar with the investigation. His attorney, Shirli Fabbri Weiss of DLA Piper in San Diego, objected to the characterization by sources that the SEC is "strongly" considering charges against her client, but did not discount the possibility of charges being brought.

Mozilo has been under criminal investigation for many months. In addition, there’s a ton of civil litigation filed by shareholders and customers who got snookered. Countrywide was purchased last year by Bank of America, which had no comment for the Daily Journal on the possible SEC action. (By the way, shame on whoever at the Daily News is responsible for this morning's "wire services" rewrite of the Daily Journal scoop that didn't happen to mention the Daily Journal. Strictly bush league. The citation has since been added.)