Former Countrywide Financial Corp. chief executive officer Angelo Mozilo and two of his top deputies were sued by federal regulators yesterday for allegedly hiding the home lender's deteriorating finances as the subprime-mortgage crisis unfolded.
While publicly assuring investors about the quality of his loans, Mozilo issued "dire" internal warnings and engaged in insider trading, accelerating stock sales to reap about $140 million, the Securities and Exchange Commission said.
The SEC suit also names former chief operating officer David Sambol and former chief financial officer Eric Sieracki.
Mozilo is the most prominent executive targeted by federal regulators examining the subprime-mortgage crisis. He cofounded Countrywide in 1969 and built it into the nation's biggest mortgage lender, helping trigger the subprime bubble by offering loans to customers with below-average credit scores. Rising defaults prompted its sale to Bank of America Corp. last year.
Mozilo's attorney said the complaint "does not tell the whole story" and said allegations about the stock sales were "without merit." Attorneys for Sambol and Sieracki denied the allegations.