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Countrywide's Mozilo May Settle With SEC

The SEC could be close to reaching a settlement on fraud charges against former Countrywide CEO Angelo Mozilo.

NEW YORK (

TheStreet

) -- A settlement between ex-Countrywide CEO Angelo Mozilo and the

Securities and Exchange Commission

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could be close.

Citing people familiar with the matter,

The Wall Street Journal

is reporting the two sides have been holding confidential talks in recent weeks, and that late Thursday the SEC ordered a scheduling conference on the case for Friday.

The article said the ordering of the conference could mean a new development in the case was imminent. If the two sides don't reach a settlement, a jury trial of Mozilo and two other former Countrywide executives would begin early next week in a Los Angeles federal court, the

WSJ

said.

The SEC filed its

complaint

against Mozilo, who was also Countrywide's chairman; David Sambol, the company's chief operating officer and president; and Eric Sieracki, its chief financial officer, in June 2009.

The agency is alleging the trio committed disclosure fraud by "holding out Countrywide as primarily a maker of prime quality mortgage loans, qualitatively different from competitors engaging in riskier lending" even as it was vastly expanding its underwriting guidelines in the 2005-2007 timeframe.

The

WSJ

report estimated that Mozilo himself could face penalties of more than $100 million, as he is also facing insider trading charges related to his sale of more than $140 million in Countrywide stock.

Countrywide became one of the poster banks for subprime lending during the financial crisis, and was eventually acquired by

Bank of America

(BAC) - Get Report

for roughly $2.5 billion in stock in a deal completed in July 2008.

Bank of America, of course, is still feeling the pain from the mortgage meltdown as its stock and those of its money-center brethren --

Citigroup

(C) - Get Report

,

JPMorgan Chase

(JPM) - Get Report

and

Wells Fargo

(WFC) - Get Report

-- all fell sharply on Thursday amid concerns about the widening impact of problems with processing foreclosures as well as how third-quarter results will shape up.

Bank of America's stock dropped 5.2% to $12.60 on Thursday with volume topping 500 million. The shares are now down about 11% so far in 2010, and are back within shouting distance of their August 31 52-week low of $12.18.

JPMorgan reported earlier this week, beating Wall Street's profit view but disappointing on revenue. Bank of America, Citigroup and Wells Fargo are all slated to issue their numbers next week.

--

Written by Michael Baron in New York.

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