NEW YORK (Reuters) - Bank of America Corp (BAC.N) said on Tuesday it is covering the legal fees of Angelo Mozilo, the former Countrywide Financial Corp chief executive charged with securities fraud and insider trading.
The largest U.S. bank said Mozilo is covered by an indemnity clause in place when he ran Countrywide, which Bank of America acquired last July 1. Mozilo had co-founded Countrywide in 1969.
The U.S. Securities and Exchange Commission filed civil charges against the 70-year-old Mozilo last Thursday, saying he made made more than $139 million of improper profits by exercising stock options in 2006 and 2007 while the nation’s housing market and Countrywide’s finances were deteriorating.
“Under the agreement that he had when Countrywide was an independent company, Countrywide continued to be responsible for his legal expenses for actions taken while he was an employee,” Bank of America spokesman Robert Stickler said.
The SEC also charged two other onetime Countrywide executives, former president David Sambol and former chief financial officer Eric Sieracki, as part of its probe.
Lawyers for the former executives last week said they planned to fight the SEC’s claims.
Bank of America has taken $45 billion from the U.S. government’s Troubled Asset Relief Program. This included $20 billion to help it absorb Merrill Lynch & Co, which it bought on January 1.
Reporting by Jonathan Stempel; Editing by Brian Moss