Mozilo, SEC talking settlement

With the civil fraud trial of former Countrywide CEO Angelo Mozilo and two other former executives scheduled to begin on Tuesday, the feds are holding settlement talks, reports the WSJ's John Emshwiller. No telling where the conversations might lead, but a status conference on the case was ordered for Friday. The SEC alleges that Mozilo and the others misled investors about the risks connected to subprime lending. It also has charged Mozilo with insider trading regarding his sale of nearly $140 million of Countrywide stock.

SEC cases routinely settle without going to trial. However, in this instance, enormous efforts have gone into preparing for trial over the past year, including extensive depositions of the defendants and others. Still, observers say both sides in the Countrywide case, one of the biggest government enforcement actions to arise out of the 2008 financial crisis, have reasons to want to avoid a trial. For the defendants--particularly Mr. Mozilo, who was one of the mortgage industry's best-known figures over the past decade--a settlement of the SEC case could mitigate the dangers of possible criminal charges. The U.S. attorney's office here has been conducting a criminal probe of Countrywide and brought witnesses before a grand jury.

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Mark Lacter
Mark Lacter created the LA Biz Observed blog in 2006. He posted until the day before his death on Nov. 13, 2013.
 
Mark Lacter, business writer and editor was 59
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