Countrywide's former chief Angelo Mozillo charged with fraud and insider dealing by SEC

The US Securities and Exchange Commission (SEC) last night charged Angelo Mozilo, the former chief executive of America's biggest mortgage lender, with securities fraud and insider dealing.

The financial regulator alleged that Mr Mozilo sold his shares in Countrywide for nearly $140m (£86m) while he knew that the company's business model was deteriorating.

David Sambol, the company's former chief operating officer, and Eric Sieracki, the former chief financial officer, have also been charged with securities fraud.

The SEC alleges that the trio misled the market by falsely assuring investors that Countrywide was primarily a prime-quality mortgage lender.

"This is the tale of two companies," said Robert Khuzami, director of the SEC's enforcement division. "Countrywide portrayed itself as underwriting mainly prime-quality mortgages using high underwriting standards. But concealed from shareholders the true Countrywide, an increasingly reckless lender assuming greater and greater risk.

"Mr Mozilo privately described one Countrywide product as 'toxic,' and said another's performance was so uncertain that Countrywide was 'flying blind'," he added.

Mr Mozilo, 70, is the most high-profile executive yet to face formal charges related to the credit crisis.

A lawyer for Mozilo called the SEC's allegations "baseless". The men deny wrongdoing.