Countrywide Faces Inquiry Over Share Sales

Angelo Mozilo, Countrywide’s co-founder and CEO, is under investigation by financial regulators for selling 130 million dollars with of shares at the start to the subprime crisis which crippled the industry over the summer. Wall Street Journal reported last night that the Securities and Exchange Commission has begun an informal inquiry into trades.

Mozilo co-founded Countrywide in 1969 and has built the company into a national lender which provides one in seven of US mortgages. He cashed in at least 132 million in shares which began in October last year and continued until this summer.  Richard More,the state treasurer of North Carolina, wrote into the SEC last week demanding an inquiry into Mozilo’s stock sales. The North Carolina’s public pension fund owns more than 9.6 billion dollars in Countrywide stock. Moore says that the timings “raise serious questions about whether this is a mere coincidence.”

Mozilo’s sales were under a plan known as a 10b5-1 which allows corporate bosses to set a long-term pattern of regular future sales, helping them avoid accusations that they may be taking advantage of share price spikes. The problem is that Mozilo changed his plan twice within four months of establishing it in October. He amended it in December and once again in February to increase the number of sales he was selling.  Supposedly the changes were independent advice recieved for Mozilo to diversify his portfolio before retirement.

Head on over to Guardian Unlimited to read more about the Chief of US mortgage giant faces inquiry over share sales.