08192017Headline:

Los Angeles, California

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Paul Kiesel
Paul Kiesel
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SEC Investigating Former Countrywide CEO Angelo Mozilo, Accused of Misleading Investors

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Bank of America, which acquired Countrywide in July, said in a regulatory filing yesterday that the Securities and Exchange Commission was conducting a formal inquiry of the lender and that it had responded to subpoenas from the federal agency, according to the Los Angeles Times.

The SEC’s investigation is focusing on whether or not Mozilo violated insider-trading law and whether Countrywide’s financial disclosures misled investors. The latter will more than likely prove to be true, as Countrywide, along with several other lenders, misled investors and borrowers through insidious, vague and fraudulent wording in its disclosure forms.

Countrywide also faces probes by the FBI and several states, including the State of California, looking primarily into whether the company employed improper lending practices. TILA violations were rampant during the subprime boom, as many lenders failed to disclose terms that are required through the Truth in Lending Act (i.e. loans that were amortizing negatively).

A Los Angeles Times report showed that, “The SEC began investigating Mozilo in September of 2007 [after the report] detailed his sale of $145 million in Countrywide stock in late 2006 and 2007 via automatic trading plans,” (Los Angeles Times, 8/8/08).

Angelo Mozilo has been receiving a lot of negative press since his infamous “reply” to a troubled borrower was dismissed by him as “whining” and “disgusting.” Mozilo has yet to comment on this latest matter.