The Securities and Exchange Commission (SEC) recently opened an informal probe into stock sales by Countrywide Financial Corp. CEO Angelo Mozilo. Countrywide, the nation's largest mortgage lender, is one of a dozen lenders under investigation by the SEC for their part in the subprime mortgage crisis.
Earlier this year, Mozilo sold an estimated $130 million in Countrywide stock through a "10b51" trading plan. This type of plan allows executives of public companies to set schedules for purchasing or selling securities in which the amount, price, and date of the transactions are specified.
Recently, North Carolina's state treasurer Richard Moore, a Countrywide investor and stockholder, asked the SEC to investigate Mozilo's stock sales. Since January, Countrywide stocks have slipped more than 50 percent.
"While Countrywide shareholders have faced massive losses, Mr. Mozilo has been stuffing his pockets," Moore told the Wall Street Journal. "The timing of these stock sales and the changes to the trading plans raise serious questions about whether this is mere coincidence. With Mr. Mozilo still in the CEO chair and with the deafening silence coming from Countrywide to its investors, the SEC needs to take a hard look at this situation."
The Calabasas, Calif.-based company recently announced a plan to cut more than 10,000 jobs and expects a $125 million to $150 million pretax restructuring charge from the move.
Mozilo co-founded the company in 1969 and from 1991-1992, he was the president of the Mortgage Bankers Association of America (MBA).
On August 10, in response to criticism of the shares sales, the 68-year-old Mozilo told Bloomberg news that he still remains "the largest single shareholder in Countrywide. The majority of my net worth remains in Countrywide. So if I saw this coming and I was bent in that direction, I would have sold all of it."
He added, "I'm sick of talking about it because the fact is everybody trades the stock day in and day out and I created this company and yet they don't want me to trade it."
