SEC proposes suit versus Countrywide founder Mozilo

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U.S. regulators have recommended filing a civil fraud suit against Countrywide Financial co-founder Angelo Mozilo for insider trading, the Wall Street Journal reported on Wednesday.

Staff at the Securities and Exchange Commission had decided to recommend filing the suit against Mozilo, co-founder of the No. 1 U.S. home-mortgage lender taken over by Bank of America Corp (NYSE:BAC - News), the Journal cited people familiar with the investigation as saying.

Mozilo attorney David Siegel said he would not comment "on any rumors" regarding the SEC's previously-disclosed investigation of Mozilo's trading activities.

"The persistent innuendo in the media and political circles that Mr. Mozilo was selling Countrywide stock because he was aware of some supposedly 'secret' adverse information about the Company is scandalous and inconsistent with even a cursory examination of the facts surrounding the history of his stock holdings," Siegel said in an e-mailed statement.

According to the Journal, the SEC sent a "Wells" notice to Mozilo weeks ago alerting him of the planned charges, which included alleged violations of insider-trading laws, as well as failing to disclose material information to shareholders.

U.S. securities regulators and criminal prosecutors have brought some big insider trading cases in recent years. The SEC, in particular, has made insider trading a priority, setting up a hedge fund unit within its enforcement division to combat unlawful trading.

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