Jun 4, 2009, 22:49 GMT
New York - The United States' financial regulator on Thursday filed fraud charges against the former chief executive of one-time mortgage giant Countrywide, in one of the toughest actions yet against those that helped cause a devastating financial crisis.
The Securities and Exchange Commission (SEC) accused former CEO Angelo Mozilo of insider trading and knowingly misleading investors about the health of Countrywide, a mortgage lender at the centre of the credit crisis that was acquired by Bank of America last year.
Two other former executives were also charged in the civil suit, which was filed in a California court. The complaint is based on email exchanges obtained by the SEC between Mozilo and others.
'Countrywide portrayed itself as underwriting mainly prime quality mortgages using high underwriting standards,' Robert Khuzami, who heads the SEC's enforcement division, said in a statement. 'But concealed from shareholders was the true Countrywide, an increasingly reckless lender assuming greater and greater risk.'
Mozilo, a co-founder of Countrywide, also allegedly made a 140- million-dollar profit by selling stock based on inside information about the company.
Mortgage companies like Countrywide were sent into a downward spiral last year amid a record slump in housing prices since mid- 2006, which caused millions of homeowners to default on their loans. Wall Street was brought to the brink of collapse by the credit crisis in October.
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