Stock sales by Countrywide CEO questioned

October 11, 2007|By New York Times News Service.

The Securities and Exchange Commission has been asked to investigate stock sales made by Angelo R. Mozilo, chief executive of the mortgage lender Countrywide Financial Corp., in the months before its shares plummeted amid the deepening mortgage crisis.

In a letter to SEC Chairman Christopher Cox written Monday, the state treasurer of North Carolina, Richard H. Moore, questioned changes that Mozilo made in his arranged stock-selling program, adjustments that allowed him to increase significantly his sales of Countrywide shares.

After starting a plan in October 2006, Mozilo twice raised the number of shares that could be sold, once in December 2006, when Countrywide's stock price was $40.50, and again in February, when the shares hit a high of $45.03.

Mozilo has had gains of $132 million since starting the October 2006 plan and expects to sell his remaining shares by the end of the week, a move that is expected to generate millions more.

"As an investor and a Countrywide shareholder, I was shocked to learn that CEO Angelo Mozilo apparently manipulated his trading plans to cash in, just as the subprime crisis was heating up and Countrywide's fortunes were cooling off," Moore wrote.

"The timing of these sales and the changes to the trading plans raise serious questions about whether this is a mere coincidence," he continued.

A Countrywide spokesman declined to comment yesterday.

The SEC, as is its custom, declined to say how it would respond to Moore's letter and whether it was examining Mozilo's trades. But Linda Chatman Thomsen, director of enforcement at the commission, said yesterday at a conference of the National Association of Stock Plan Professionals in San Francisco that the SEC was taking a closer look at planned-selling programs by executives. They are known as 10b5-1 plans for the section of the securities laws that allows them.

"We are making sure that a rule designed to help executives with a legitimate purpose is not being used for illegitimate purposes," Thomsen said.

She declined to say whether any specific investigation had advanced to the point where inquiry letters had been sent.

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