According to a complaint by the Securities and Exchange Commission, former Countrywide chief Angelo Mozilo pocketed around $140 million by selling shares of his company when he knew based on inside information that the stock was headed for a fall. In today’s settlement of the SEC case, the agency is assessing a $67.5 million penalty against Mozilo. The penalty includes the return of $45 million in ill-gotten profit and a $22.5 million disgorgement fee.
Why the discrepancy between what Mozillo took home and what he paid in the settlement?
On a conference call with the media today, SEC chief enforcement officer Robert Khuzami said that his agency seeks a “net number” in assessing penalties related to insider trading. The idea is to tease out how much Mozilo benefited from his wrongdoing specifically vs. other factors that might have been at play that affected Countrywide’s stock price.
For example, Khuzami said, a factor like the overall decline in the housing market precipitated share-price declines across companies in the mortgage business would not be taken into account in assessing a penalty against Mr. Mozilo.
“That’s the subject of expert witness testimony. … There’s often considerable disagreement,” Mr. Khuzami said.
Not exactly an eye for an eye.
Khuzami fielded multiple questions from reporters who were interested in finding out exactly how much of the SEC penalty would come out of Mozilo’s pocket. Khuzami told reporters to refer such questions to Bank of America and Mozilo himself.
mtaylor [at] observer.com | @mbrookstaylor
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