Countrywide share sales under scrutiny

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The Independent Online

Wall Street's watchdog, the Securities & Exchange Commission, has been asked to investigate whether Angelo Mozilo, the chief executive of America's biggest mortgage lender, illegally sold shares in his company, Countrywide Financial, ahead of the credit market meltdown that halved the stock price.

The state treasurer in North Carolina, Richard Moore, accused Mr Mozilo of an "abuse of shareholders" by accelerating plans to sell Countrywide stock over the past year. He demanded to know if the timing – just a few months before massive losses on sub-prime mortgages were revealed – was more than a fluke.

Mr Mozilo says he has long been following financial advice to diversify his personal wealth away from the company he founded in 1969. In regulatory filings detailing the sales, the company has insisted the sales do not reflect Mr Mozilo's view of its prospects.

The Washington Service, which tracks directors' share trading, calculates that Mr Mozilo has sold $284m (£140m) of Countrywide shares in the past two years, and exercised options valued at $67.2m.

Regulatory filings show that the sales were made under pre-arranged plans, so as the timing of individual trades cannot be influenced by directors' knowledge of imminent company announcements. Mr Mozilo sold shares under at least two plans this year, one which began in October last year, and a second that started in December and was amended on 2 February.

Countrywide said yesterday that its customers' mortgage arrears continued to rise in September and foreclosures doubled. It wrote 44 per cent fewer mortgages than a year ago, after tightening lending standards.