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Well the Wall Street Journal says that the FCC is preparing to file charges against countrywide co-founder Angelo Mozilo.
In what would be.
The highest profile legal battle initiated by the government since the financial crisis began.
Joining us now with -- copy professor of law at Columbia University looking at all there is to talk about this welcome professor.
Look the government has served to notice it's -- the wealth notice so no charges just yet we've seen what they're looking at.
What's your best guess of the evidence they would have to bring charges against him.
While I think we have had some indications in the journal story that they're focusing both on insider trading.
And on falsification.
Of the company's financial reporting.
That is Countrywide Financial results may have been fully inflated or otherwise misstated and material fashion that would be a classic ten B five violation.
When you get a wells notice like back.
In the past it didn't necessarily I'm talking under Christopher Cox the previous SEC chair didn't necessarily mean that you get anything slapped on you.
Right now there's an atmosphere in Washington in the nation where it's almost as if they want to see the handcuffs brought out rattled what do you think of the chances that this will be brought to case.
I think this case will be brought.
Mary Schapiro the new chairman of the SEC has made a number of public statements all I think quite justified if you want to take the handcuffs off the enforcement division.
Before the division was quite constrained under the last administration.
And I think this is such a high profile case it really would be a rejection of the enforcement staff.
If she didn't back -- to the extent of at least letting the charges be filed and heard in court so I think we're gonna see a case possibly with some marginal modifications.
Okay Mozilla would be the highest profile person right now -- in this position do you expect to see more of this.
What it will definitely see more -- CC cases remember all we're talking about here is a civil case.
And there is no indication yet of whether these charges might go criminal whether US attorney would also prosecute.
But insider trading cases are frequently prosecuted.
That's the reason that many defense attorneys would have advised mr.
Mozilo that it's better to settle that and get involved an elaborate factual discovery.
Because there's the FCC develops factual evidence that could turn that over on a plotters to a US attorney and we might well see a criminal indictment.
But that's a reason for quick settlement.
Companies -- But in this atmosphere do the investigators then look for undisclosed information is that the first thing -- look -- -- they're trying to figure out a way.
To be able to say you did it you knew what you were doing handcuffs out.
If there is substantial -- then -- -- going to look to see what was not disclosed to the market at the time he was selling the stock.
His defense will be that he had what's called a ten B 51 plan.
Which is the plan that allows chief executives.
-- give investment discretion to their broker or other fiduciary and thereby escape personal liability but for that defense to work.
There can be no undisclosed material information at the time you established the plant and that will be the real factual dispute in an insider trading case involving him.
This is a guy who up until the sub prime implosion.
Was considered a hero I mean at my old business network they held this guy out he was sort of the superstar and everybody put the -- the celebrity look at him he's -- -- that.
The pick and rolls Royces look at him.
But now there almost seem to be this this swirling around him he's kept a very low profile but.
What do you think he could've done better when it all came down to what happened.
Remember what you just said.
You can think back to 2001.
And the thing same thing could have been said -- Ken lay or Jeff Skilling.
Enron was the most admired company in America in 2001.
Until it failed.
And business failure and the resulting financial morass that results.
That can produce very change public attitudes very quickly.
This is not a good time for him to have to face a jury if this a case ever were to go -- you -- up our top executives are nervous right now John.
I think there are some top executives I think there are people within the AIG network who face some criminal prosecution.
I don't however believe that we're gonna see the criminal sanction used against the senior executive city there.
Bear Stearns Merrill Lynch or.
I even Lehman I think those cut those executives may have had a business failure but I don't think you can equate that with fraud.
We will watch and see if they escaped John Coffee Columbia university law professor great to see once again OK let's get a.
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