As MSNBC reported, Countrywide Financial’s not exactly press-shy CEO Angelo Mozilo is under investigation by the SEC for allegedly abusing a trading rule that allows executives to buy and sell their own stock without violating insider trading laws:
Mozilo sold some $130 million in Countrywide stock in the first half of the year through a prearranged 10b5-1 trading plan. The plans, popular among corporate executives, allow a company insider to set up a program in advance for such transactions and proceed with them even if he or she comes into possession of significant nonpublic information.
“We are making sure that a rule designed to help executives with a legitimate purpose is not being used for illegitimate purposes,” Linda Thomsen, the SEC’s enforcement director, said.
The action was encouraged by North Carolina state Treasurer Richard Moore, a slick politician with presidential hair who loves to be in front of a camera:
North Carolina state Treasurer Richard Moore last week asked the agency to investigate Mozilo’s stock sales. Moore raised questions about changes made to Mozilo’s plan in the months before the company’s stock plunged, allowing Mozilo to significantly increase his sales of Countrywide shares.
Moore, the trustee of a pension fund that holds about 500,000 shares of Countrywide stock worth some $8.6 million, said in a letter to SEC Chairman Christopher Cox that he was “shocked” to learn Mozilo “apparently manipulated his trading plans to cash in” as the crisis involving high-risk mortgages was heating up.
“As one of many investors who have felt the painful losses in Countrywide stock, I am outraged at his manipulation of the system and this abuse of shareholders,” wrote Moore, a Democrat who is running for governor. “The timing of these sales and the changes to the trading plans raise serious questions about whether this is mere coincidence.”
Not only does Moore try to deflect blame for owning Mozilo’s brown smelly bag, he fashions himself and the SEC as the white knights riding to the rescue of the investor class:
Word of the SEC’s inquiry “is good news for investors and sends a clear message that the questions raised are serious,” Moore said in an e-mailed statement Wednesday.
- Mozilo didn’t just slip off the Titanic this year. He’s sold over $400 million of his own stock over the past several years – all disclosed. Shame on Moore and the people running the NC pension fund for falling asleep at the switch.
- When Mozilo was a poster-child for “expanding homeownership, ” the political class and the financial media loved him. Now that his stock has been more than cut in half and the country’s largest mortgage lender is looking more like another Enron, the finger pointing is beginning.
- The entire political class is obviously guilty here: the Greenspan Fed for fomenting a housing bubble for the ages, the ill-conceived public policy of expanding “homeownership,” politicians running public pension money, and SEC bureaucrats claiming they can protect investors.