Attorneys for Angelo Mozilo contend that the SEC’s civil-fraud suit against the former Countrywide Financial Corp. chief executive misquotes some evidence and ignores company disclosures. The lawyers argue that the omissions and alleged inaccuracies undermine the SEC’s contention that investors were misled about Countrywide’s financial condition. They are asking that the suit be dismissed, said the Wall Street Journal. Attorneys for the two other defendants in the case, former Countrywide president David Sambol and former chief financial officer Eric Sieracki, filed related dismissal motions. The SEC complaint, filed in June, contends that the three former Countrywide executives defrauded investors by hiding information from 2005 through 2007 that the company, once the nation’s biggest home-mortgage lender, was facing dangers from high-risk lending practices. Countrywide was purchased last year by Bank of America amid financial problems. Mozilo’s court filing contends that the SEC complaint uses “sound bites” of some pieces of evidence and “takes them so seriously out of context that the clear meaning of the words as they were originally used is plainly distorted.” The defendants contend that besides Countrywide’s quarterly and annual reports to shareholders, the company made numerous disclosures in other publicly available documents. These documents provided loan information “going beyond that which even the SEC appears to contend was necessary,” argues Sambol’s court filing. The defense didn’t directly address some potentially damaging email statements. In one, Mozilo described a Countrywide loan product, which allowed a customer also to borrow his down payment, as “the most dangerous product in existence and there can be nothing more toxic.” While conceding that the former Countrywide CEO made some “colorful statements,” the Mozilo filing argues this loan product wasn’t “material” to Countrywide’s financial condition and so isn’t relevant to a securities-fraud charge.
Mozilo’s Lawyers Claims SEC is Distorting Charges
The defendants contend that besides Countrywide’s quarterly and annual reports to shareholders, the company made numerous disclosures in other publicly available documents.
September 7, 2009