Friday, October 15, 2010

Civil Settlement for Players in Countrywide Case

The Securities Exchange Commission is reporting here that Former Countrywide CEO Angelo Mozilo will pay the SEC $22.5 million to settle SEC charges "that he and two other former Countrywide executives misled investors as the subprime mortgage crisis emerged. The settlement also permanently bars Mozilo from ever again serving as an officer or director of a publicly traded company."  The SEC notice also states:

"Former Countrywide chief operating officer David Sambol agreed to a settlement in which he is liable for $5 million in disgorgement and a $520,000 penalty, and a three-year officer and director bar. Former chief financial officer Eric Sieracki agreed to pay a $130,000 penalty and a one-year bar from practicing before the Commission. In settling the SEC’s charges, the former executives neither admit nor deny the allegations against them."

Some may ask - what about a criminal action?

1. Just because a civil case is proceeding with a resolution doesn’t mean that a criminal case might not be forthcoming. When the civil and criminal case are ongoing at the same time we call them parallel proceedings. But it doesn’t always mean that they have to start at the same time. In some instances, the criminal case will proceed after the civil has been ongoing for some time.

2.White collar criminal cases take a long time to investigate - they are document driven cases and as such require expertise that one doesn’t find when investigating a simple burglary or robbery case.

3. Civil cases have a different standard of proof - a much lower standard than criminal cases which require that prosecutors prove the case beyond a reasonable doubt. It is a more difficult burden and prosecutors need to assess whether they have accomplished what is needed with a civil enforcement action or if a criminal prosecution is needed. They also need to assess whether there is any criminal activity to warrant a criminal action.

4. The government needs to also determine if any conduct violates the law - or were the decisions that were made business decisions that may be wrong -- but ones that do not meet a level of criminality.

5.  Hopefully prosecutors will also consider how best to spend our tax dollars.

(esp)

Addendum, Gretchen Morgenson, NYTimes, How Countrywide Covered the Cracks 

http://lawprofessors.typepad.com/whitecollarcrime_blog/2010/10/civil-settlement-for-players-in-countrywide-case.html

Civil Litigation, Fraud, SEC, Settlement | Permalink

TrackBack URL for this entry:

http://www.typepad.com/services/trackback/6a00d8341bfae553ef0133f51abbc0970b

Listed below are links to weblogs that reference Civil Settlement for Players in Countrywide Case:

Comments

"Hopefully," Countrywide will be held to account in a criminal case: a win/win.

Posted by: Benson Weintraub | Oct 23, 2010 3:15:59 PM

Post a comment