I.PROCEDURAL AND FACTUAL BACKGROUND
The SEC’s Complaint alleges that three senior executives of Countrywide FinancialCorporation (“Countrywide”) committed securities fraud, and that Countrywide’s former chairman ofthe board and chief executive officer engaged in insider trading. Essentially, the Complaint allegesthat Defendants Mozilo, Sambol, and Sieracki (collectively “Defendants”) made misleadingstatements and omissions from 2005 through 2007, reassuring investors that Countrywide wasmainly a maker of quality mortgages, qualitatively different from its competitors who primarilyengaged in riskier lending practices. However, during this same time period, Countrywideallegedly undertook an unprecedented loosening or expansion of its underwriting guidelines, to thepoint of virtually abandoning its guidelines by matching products offered by any competitor, writingriskier and riskier loans, and making exceptions to its already lax underwriting guidelines. As aresult, the SEC alleges that Defendants defrauded Countrywide’s investors.
Angelo Mozilo was a founder of Countrywide, and served as its chairman of the board andchief executive officer (“CEO”) from Countrywide’s formation in 1969 until it was acquired by Bankof America in 2008. He signed the Forms 10-K for the years ended 2005, 2006, and 2007, theSarbanes-Oxley certifications, and each of the offerings alleged in the Complaint whichincorporated the most recent Form 10-K. From November 2006 through August 2007, pursuant to10b5-1 plans adopted in late 2006 and amended in early 2007, Mozilo exercised stock options andsold the underlying shares resulting in total proceeds of over $140 million.
This factual background is in large part a restatement of the Court’s November 3, 2009Order denying Defendants’ Motions to Dismiss, which summarized the allegations of theComplaint. For the most part, this factual background is undisputed or irrelevant to the Court’sruling on Defendants’ Motions for Summary Judgment. Those facts that are relevant to the Court’sruling are discussed in detail
Citations to “Statement of Facts” or “SF” refer to the facts andsupporting evidence set forth in Defendants’ Corrected Joint Statement of Uncontroverted Factsand Conclusions of Law [Docket No. 214], the SEC’s Statement of Genuine Issues of Material Fact[Docket No. 302], and Defendants’ Joint Response to Plaintiff SEC’s Statement of Genuine Issuesof Material Fact and Joint Reply in Support of Defendants’ Joint Statement of UncontrovertedFacts [Docket No. 322], which consist of 571 paragraphs and a total of 1031 pages. The partieshave filed extensive objections to the evidence supporting the Statement of Facts. Many of theobjections are not well-taken, inconsistent with Ninth Circuit law on the admissibility of evidence atthe summary judgment stage, and simply added to the Court’s burden in reviewing the voluminousdocuments submitted in connection with these motions.
See Fraser v. Goodale
, 342 F.3d 1032,1036 (9th Cir. 2003) (“At the summary judgment stage, we do not focus on the admissibility of theevidence’s form. We instead focus on the admissibility of its contents.”). To the extent that theCourt has relied on evidence to which the parties have objected, the Court has considered andoverruled those objections for the purposes of these motions for summary judgment. As to theremaining objections, the Court finds that it is unnecessary to rule on those objections because thedisputed evidence was not relevant to the Court’s rulings.Page 2 of 25
Initials of Deputy Clerk sr
Case 2:09-cv-03994-JFW -MAN Document 351 Filed 09/16/10 Page 2 of 25 Page ID#:20313