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calendar   Saturday - October 16, 2010

Too Big To Fail, Or To Fine

SEC fines Countrywide CEO $67.5 Million



Too bad there’s no ruling that he actually has to pay them the money



Countrywide Financial Corp. co-founder Angelo Mozilo has agreed to a $67.5 million settlement to avoid trial on civil fraud and insider trading charges that alleged he profited from doling out risky mortgages while misleading investors about the risks.

Two other former Countrywide executives also settled before trial next week on charges filed by the Securities and Exchange Commission. But employment agreements that protect the men from lawsuits involving the failed lender mean Bank of America Corp., which bought Countrywide in July 2008, will pick up most of the tab.

The agreement requires Mozilo to repay $45 million in ill-gotten profits and $22.5 million in civil penalties. Former Countrywide President David Sambol owes $5 million in profits and $520,000 in civil penalties, and former Chief Financial Officer Eric P. Sieracki will pay $130,000 in civil penalties.

It’s “the fitting outcome for a corporate executive who deliberately disregarded his duty to investors by hiding what he saw in the executive suite,” SEC Enforcement Director Robert Khuzami said in a conference call with reporters.

But $25 million of Mozilo’s restitution will come from an escrow fund the company set up to cover shareholder litigation and Mozilo has no obligation to pay the remaining amount, according to the settlement agreement.

Sambol’s agreement stipulates that his entire $5 million forfeiture will come from the escrow fund.
...
The SEC accused the men of misleading shareholders about the quality of the loans on Countrywide’s books. The civil complaint also accused Mozilo of acting on his inside knowledge of the company’s precarious state when he sold shares between November 2006 and October 2007 ahead of its collapse, reaping more than $139 million.

Under the settlement, the three men did not admit wrongdoing.
...
Under the settlement, Mozilo agreed to never again serve as an officer or director of a publicly traded company. Sambol agreed not to do so for three years.

So there you go. Some people are above the law. So they get a show fine from a show trial, and somebody else pays the bill. No admission of guilt or wrongdoing, but gee, Mozillo can’t be a CEO anymore. Gee, such a shame, since he’s keeping that $139 million.


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Posted by Drew458   United States  on 10/16/2010 at 12:44 PM   
Filed Under: • Big BusinessCorruption and GreedMiscellaneous •  
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