Image caption Mr Mozilo's penalty was "fitting" the watchdog said.

The former boss of US lender Countrywide Financial has agreed to pay record fines to the financial watchdog to settle fraud charges.

Angelo Mozilo will pay the Securities and Exchange Commission $22.5m (£14.1m) and repay $45m of profits.

He is the highest profile executive to face charges relating to the US sub-prime mortgage crisis in 2007.

The SEC alleged he, with two colleagues, had failed to disclose risks that Countrywide was taking.

The civil charges related to claims he had misled the market by falsely assuring investors that Countrywide was a prime quality mortgage lender that had avoided the excesses of its competitors.

Mr Mozilo was also charged with selling company shares based on inside knowledge of the company's troubles.

Bank of America eventually rescued the biggest US mortgage lender in July 2008, agreeing to pay $4bn in shares.

'Looming disaster'

Mr Mozilo's penalty was the largest ever paid by a public company's senior executive in an SEC settlement.

It was a "fitting outcome" said Robert Khuzami, head of the SEC's enforcement division.

Mr Mozilo "deliberately disregarded his duties to investors by concealing what he saw from inside the executive suite - a looming disaster in which Countrywide was buckling under the weight of increasing risky mortgage underwriting," Mr Khuzami said.

The other two Countrywide executives, David Sambol and Eric Sieracki, have also agreed to pay hundreds of thousands of dollars to settle the charges, the SEC said.

The sub-prime crisis was caused by mortgages being given to people who could not really afford them.

The loans were then repackaged by banks and sold on to investors, made to look like low-risk investments.