This morning’s must read MSM article is a long form piece from Gretchen Morgenson, titled: How Countrywide Covered the Cracks.
“What Mr. Mozilo, now 71, knew about Countrywide’s problems, and precisely when he knew it, was what eventually led the Securities and Exchange Commission to file civil securities fraud charges against him last year. And on Friday, in the Los Angeles courtroom of John F. Walter, a federal District Court judge, representatives for Mr. Mozilo and for two of his top lieutenants — David Sambol, Countrywide’s former president, and Eric Sieracki, the company’s former chief financial officer — settled those charges.
As part of the settlement, Mr. Mozilo and his co-defendants didn’t admit to any wrongdoing. But Mr. Mozilo agreed to pay $67.5 million in a penalty and reparations to investors and is permanently banned from serving as an officer or a director of a public company. Mr. Sambol is paying $5.52 million in a penalty and reparations and agreed to a three-year ban from serving as an officer or director of a public company. Mr. Sieracki agreed to pay a $130,000 penalty.”
The full article goes into to the gritty details — but proving exactly what someone knew and when they knew it is more challenging in court then most people realize. I have not read the full prosecutors docs — no one outside of the SEC and Mozilo’s lawyers have — but its the reason why these cases tend to settle rather than go full trial.
Anyway, go read the full piece — if you can stomach it.
Man with a Tan Needs a Plan (June 25th, 2008)
How Countrywide Covered the Cracks
NYT, October 16, 2010