[JURIST] The US Securities and Exchange Commission (SEC) [official website] on Thursday charged [complaint, PDF] former Countrywide Financial Corporation officials with securities fraud arising from misleading investors. Former CEO Angelo Mozilo [BusinessWeek profile] was additionally charged with insider trading for selling his stock in the company based on inside information, profiting almost $140 million. The SEC alleges that Mozilo, former president David Sambol and former CFO Eric Sieracki falsely assured investors about credit risks involved in the company's efforts to build and maintain their market share, claiming that they avoided the mistakes made by their competitors. The complaint alleges that the officials knew the company was issuing risky loans and that defaults and delinquencies would rise as a result. Additionally, the SEC claims that, despite severe internal concerns about the high-risk options, crucial information was hidden [press release] from investors and potential investors who were assured that the company "consistently produced quality mortgages." SEC Enforcement Director Robert Khuzami [official profile] addressed [speech text] the fraud charges:

Since I came to this job on March 30, we have made it a priority to pursue cases at the root of the financial crisis.

This is a tale of two companies. There was the one that investors saw from the outside, allegedly characterized by prudent business practices and tightly-controlled risk. But the real Countrywide, which could only be seen from the inside, was one buckling under the weight of deteriorating mortgages, lax underwriting, and an increasingly suspect business model.