SEC May Bring Civil Case Against Mozilo

Angelo Mozilo, the former head of Countrywide Financial, may soon be facing a civil fraud charge from the Securities and Exchange Commission, according to a news report.
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Angelo Mozilo, the former head of Countrywide Financial, may soon be facing civil fraud charges from the

Securities and Exchange Commission

, according to a news report Wednesday.

The Wall Street Journal

, citing anonymous sources familiar with the investigation, said Mozilo has been sent a Wells notice informing him of the charges, which could include insider-trading violations and failure to disclose material information to stockholders. The notice is not an official civil suit, but it warns that an SEC inquiry may lead to such a suit, and it allows the potential defendant to respond.

Bank of America

(BAC) - Get Report

saved Countrywide from collapse through an acquisition last year. The California-based lender was struggling to stay afloat as massive losses accrued from its troubled mortgage portfolio.

The firm was once the largest mortgage issuer in the country, and it has come under fire by borrowers, legislators and commentators who accused the company of deceptive loan practices. An incendiary email from Mozilo -- calling troubled borrowers' efforts to seek help "disgusting" -- that was accidentally sent to a mortgage borrower has made him the poster boy of top executives who ignored the plight of average Americans.

Countrywide's near-failure due to risky lending, and the ensuing fallout, led the SEC to target Mozilo. However, his lawyers could still persuade the agency not to file charges, the report said.