The SEC staff sent a Wells notice to Mozilo a few weeks ago informing him of possible charges, The Wall Street Journal reported online, citing unnamed people familiar with the investigation. The report said the charges include illegal insider trading and failing to disclose significant information to Countrywide shareholders.

In issuing Wells notices, the SEC enforcement staff customarily gives companies or individuals the chance to make the case why charges are unwarranted. That means a formal decision by SEC commissioners to file charges may not occur.

SEC spokesman John Nester declined to comment Wednesday.

In the fall of 2007, the SEC began examining Mozilo's sales of stock in Countrywide, the company he co-founded 40 years ago and built into the nation's largest mortgage lender. Calabasas, California-based Countrywide, a major player in the subprime mortgage market, was crushed like many lenders when the market for the high-risk debt collapsed in 2007. Countrywide was acquired last year by Charlotte, North Carolina-based Bank of America Corp.

Mozilo has denied any wrongdoing. His attorney said in a statement Wednesday, "We will not comment on any rumors concerning the SEC's nonpublic fact-finding investigation."

"We do not believe there is any fair basis for allegations to be made against Mr. Mozilo," the attorney, David Siegel, said in a statement e-mailed to The Associated Press and other news organizations. "All of Mr. Mozilo's stock sales were made in compliance with properly prepared and approved trading plans, and reflected recommendations by his financial adviser over a long period of time. The persistent innuendo in the media and political circles that Mr. Mozilo was selling Countrywide stock because he was aware of some supposedly 'secret' adverse information about the company is scandalous and inconsistent with even a cursory examination of the facts surrounding the history of his stock holdings."

Mozilo sold some $130 million in Countrywide stock in the first half of 2007 through a prearranged 10b5-1 trading plan. These plans allow a company insider to set up a program in advance for such transactions and proceed with them even if he or she comes into possession of material nonpublic information.

North Carolina's state treasurer, who asked the SEC in 2007 to investigate Mozilo's stock sales, raised questions about changes made to Mozilo's plan in the months before the company's stock plunged which allowed Mozilo to significantly increase his sales of Countrywide shares.

Mozilo had sold company shares through prior arrangements since 2004; the pace of his sales began to quicken in October 2006 when he put a new plan into effect. Mozilo has said that he did so to reduce his stake in Countrywide and diversify his personal investments in an orderly fashion in advance of his retirement, which was slated for December 2009.