World Clock

Friday, 15 October 2010

One Disgraced Former CEO and a Missed Opportunity for Bank of America

Today (15-10-2010) in a settlement with the SEC it was announced that the disgraced CEO, Angelo Mozilo would pay $65.5m in charges relating to insider trading and alleged profit taking from the doling out risky mortgage whilst at the same time misleading investors about the risks involved. This settlement was reached by both parties to avoid what would have likely been a lengthy civil fraud trail.

The former Countrywide Financial CEO, Angelo Mozilo reaped approximately $406m through selling company stock between 1984 when the company launched its IPO and 2008 when the company was brought by Bank of America (BofA).


This agreement demands that Mozilo pays $45m in disgorgement charges and a further $22.5m in civil penalties. After the settlement was reached the SEC Enforcement officer was quoted as saying it’s “the fitting outcome for a corporate executive who deliberately disregarded his duty to investors by hiding what he saw in the executive suite”. This settlement with the SEC represents a meagre 16% of Mozilo’s net worth given the total value of shares he sold whilst at Countrywide. Additionally Mozilo admitted to not wrongdoing.

To add insult to injury it has come to light that BofA the company that brought Countrywide Financial during the height of the financial crisis in 2008 is to pay $20m of Mozilo’s disgorgement charges. At a time when Western financial institutions are in the process of restoring their damaged reputations and tarnished image as a result of the financial crisis seems to defy logic. This act by BofA would seem to go completely against the grain of this given the nature of Angelo Mozilo’s changes. It would seem to me that Brian Moynihan the companies CEO has missed a golden opportunity to alleviate some of BofA tainted reputation by not refusing to pay part of Mozilo’s disgorgement charges.

However, despite all this the public can all breathe a sigh of relief for being safe in the knowledge that Angelo Mozilo is prevented from working for a public company again for life. Maybe there is some justice after all.

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