SAN FRANCISCO (Reuters) - The Securities and Exchange Commission received the go-ahead to take former Countrywide Chief Executive Angelo Mozilo and two other former Countrywide executives to trial, a federal judge in Los Angeles ruled on Thursday.
In one of the highest profile enforcement actions to arise out of the recent financial collapse, the SEC accused Mozilo, former Countrywide President David Sambol and former Chief Financial Officer Eric Sieracki of failing to disclose the true state of Countrywide's deteriorating mortgage portfolio.
Regulators also contend Mozilo made millions by dumping Countrywide stock before the truth emerged.
Attorneys for the defendants have denied any wrongdoing, and argued in court filings that Countrywide was upfront about the risks of its mortgages.
But U.S. District Judge John Walter refused to resolve the case in Mozilo's favor on Thursday, ruling that the SEC had raised enough factual issues for it to be decided by a jury, according to court documents.
An attorney for Mozilo was not immediately available for comment, nor was the SEC. Sambol's attorney declined to comment.
Shirli Weiss, an attorney for Sieracki, said they looked forward to trial.
"His Honor was careful to note that it is not his function in this motion to weigh the evidence or to determine truth," she said.
Weiss said it remains to be seen whether the SEC will be able to convince a jury of its case.
Walter did throw out a small portion of the SEC's case against Mozilo and Sieracki, ruling that a false Sarbanes-Oxley certification does not constitute an independent violation of securities laws.
Trial is currently scheduled to begin in Los Angeles on October 19. The case in U.S. District Court, Central District of California is SEC v. Angelo Mozilo et al., 09-cv-03994.
(Reporting by Dan Levine; editing by Carol Bishopric)
