Countrywide Financial Corp. founder and former chief executive Angelo Mozilo must face trial on regulators' claims he misled investors about risks tied to subprime lending, a judge ruled.

U.S. District Judge John F. Walter in Los Angeles late last week denied legal filings by Mozilo and two other former senior Countrywide executives, David Sambol and Eric Sieracki, for a ruling that no genuine issues had been raised to justify a trial.

The case, brought by the Securities and Exchange Commission (SEC), is now set for a jury trial in October.

"It remains to be seen whether the [SEC] will be able to convince a jury that defendants' statements were indeed misleading and material," Walter said in his decision. "At the summary judgment stage, the judge's function is not himself to weigh the evidence and determine the truth of the matter."

In June 2009 the three men were slapped with a massive civil fraud suit, accusing them of deliberately misleading investors in the company's stock and engaging in insider trading.

Four years ago CFC's shares were trading in the $40 a share range. By the time Bank of America bought the giant lender/servicer in the summer of 2008, its stock was trading as low as $3. Investors lost billions on CFC.

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