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SEC Turns Spotlight on Countrywide CEO Mozilo
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Reuters News Service and the Associated Press are both quoting a story in the
Wall Street Journal on Wednesday that the controversial CEO of Countrywide
Mortgage, Angelo Mozilo, is under an informal investigation by the
Securities and Exchange Commission (SEC).
Countrywide is the largest mortgage company in the country and Mozilo, its
founder, is generally credited or blamed for the company's evolution from
a mostly conventional lender into one where subprime products dominated.
Along with dozens of other companies Countrywide faced a liquidity crisis several
months ago. Because of rising default rates among its loans 61 percent of its
capitalization ($15 billion) evaporated during the first eight months of 2007
and its survival was in some doubt until Bank
of America stepped forward to invest $2 billion in the company, Countrywide
is still casting around for additional investors and a Reuters article on September
12 said that there were large numbers of $10 Countrywide October Puts outstanding.
A Put is an option that allows an investor to purchase a stock at that price
- essentially a bet that a stock price is going to fall before expiration of
the Put. At that time Countrywide was trading at $16 and change. The stock,
however, closed yesterday at $17.35. One year ago the stock was selling in the
$40 range.
Countrywide has announced plans to eliminate 10,000 to 12,000 jobs -
approximately 20 percent of its workforce - and will take a $125 to $150 million
pretax restructuring charge resulting from the downsizing.
The SEC is apparently investigating a dozen or so companies,
including Countrywide, in connection with the subprime mess but, according to
The Wall Street Journal article it is taking a special if informal look at Mozilo.
At issue is the sale by Mozilo of some 130 million of his
company's stock in the first six months of 2007. It seems that there is a rather
large loophole... ahem, provision, in the rules against insider trading that
allows an insider to set up what is called a 10b51 trading plan. Such a plan,
once established, allows the insider to proceed with transactions such as buying,
selling, or exercising options even if he or she subsequently comes into possession
of information that might impact stock prices which is not available to the
public.
North Carolina's state treasurer Richard Moore last week asked the SEC to investigate
Mozilo's stock sales, claiming that there were changes made to the pre-set trading
plans in the months before the company's stock fell. An SEC insider speaking
under a guarantee of anonymity, however, said that the informal inquiry into
Mozilo's stock activities had been going on for a while.
The SEC had no immediate comment on the report nor did Countrywide, but the
agency has previously said it is "looking hard at the general issue of
whether executives are illegally trading on insider information and using a
preset trading plan to avoid suspicion."
Forbes lists the 68-year-old Mozilo as the nation's seventh most highly compensated
chairman with a total compensation package of $141.98 million (approximately
$48 million in salary.) Over the last five years his total
compensation was $295.73 million. He is listed as the top-ranked executive within
Forbes category of Diversified Financials.
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Comments (16)
| It's too bad that the Patriot Act does not enclude "Financial Terriorists" such as these people. But this is what happens when capitalism ignores it's checks and balances and greedy loose cannons occupy CEO and board positions in business.
I had a sub prime mortgage with these people. I was fortunate enough to find a local banker who took time to show me the problems I could encounter if I stayed with Countrywide. I truly feel sorry for those who live in a land of plenty and lose there homes because of people such as these. |
|
| Above Posted By:
Mart
| Mon, 16 Jun 2008 12:09:50 EST |
| I hope he pays for being the greedy pig he is. That said, at what point do people take responsibility for their own actions (not his employees) I'm speaking to the borrowers. We don't need MORE government regulations, we need people to understand that if you make $2,000 per month that you can't afford a mortgage payment of $1,800 per month-basic math. Quit blaming everyone else for your problems, if you levereged more than you can afford who's fault is that? |
|
| Above Posted By:
Anonymous
| Thu, 1 May 2008 15:37:00 EST |
| I was just laid off by CW after receiving a top employee award for 2006. I hope Mozilo's millions keep him warm IN HELL..... |
|
| Above Posted By:
Anonymous
| Thu, 3 Jan 2008 15:52:35 EST |
| I use to be a broker for Schwab for 8 years. I now own my own little business with 10 employees. I personally would not run my company like Mr. Mozilo due to the fact I would go bankrupt. In the case of these kind of CEO's they don't go bankrupt they just rob the bank. I don't get it. How can a CEO run a company into the ground and walk away with millions? |
|
| Above Posted By:
Shawn
| Tue, 20 Nov 2007 23:29:03 EST |
| I worked as an accounting consultant at CW on two projects, several years apart. One thing that struck me about the top management there was its obsession with its stock. It went beyond the normal desire to have one's share price increase over time. I would be willing to bet that Mozilo and his key people would do anything to drive up the price and cash out when they thought the time was right. |
|
| Above Posted By:
P
| Thu, 25 Oct 2007 15:53:30 EST |
| Cash back at closing when purchasing a property has always been against respa laws but somehow between title company, Realestate Lawyer,Loan officer and the Realtor working as a team they have found ways around the law to do so. So called loop holes. Then inturn buy another continue until they all go into foreclosure. Lets just call it what it really is stealing. Prison time anyone? We will all be paying for it. How higher rates, higher fee's. |
|
| Above Posted By:
Sue
| Wed, 24 Oct 2007 18:49:10 EST |
| I worked for Countrywide in a Southern CA branch, one of the most profitable in the country. The top originator in the country worked there too. I saw firsthand how corrupt this industry really is. Good loan officers weren't able to make the money unethical loan officers did, and therefore the "numbers" made these honest originators less desirable. |
|
| Above Posted By:
Anonymous
| Wed, 24 Oct 2007 13:05:07 EST |
| I work in the mortgage industry in NJ. Just a few months ago, and for several years prior to our industries troubles Countrywide would approve and fund just about any loan. Lenders in our community would turn a borrowers away for lack of income. One week later they would close with CW. They would literally close any loan. Now management is selling stock! I hope they are held accountable.
|
|
| Above Posted By:
NJ
| Wed, 24 Oct 2007 04:30:55 EST |
| Required Insider Trading reports to SEC last year for Countrywide show there was NOT A SINGLE BUY. For 12 months thru Oct 12 there were 184 sales covering 7,230,211 shrs. Several insiders were involved, Mozilo being chief among them. Prices ranged from $45 to $30 mostly, with recent sales as low as $18.38. Roughly $250,000,000. Talk about the foxes and the henhouse! Our corp and gov structures are so corrupted that only a Teddy Roosevelt can help us. Maybe Huckabee or Obama? |
|
| Above Posted By:
Charles Clark
| Mon, 22 Oct 2007 22:18:10 EST |
| When is this all going to stop? When the whole econonmy falls apart and the crooks are all living in another country living off thier spoils that we all will suffer from? This is corruption and America needs to look inward at themselves and choose on a daily basis to do what is right and honest. |
|
| Above Posted By:
Sue
| Mon, 22 Oct 2007 07:46:22 EST |
| He should use some of that money and help some of the people his company stuck into predatory loans that they know would be unaffordable for borrowers. Or even better start restructing those loans back to the original teaser rates so that all of these CW homeowners can stop losing their home. He should be ashamed. |
|
| Above Posted By:
RCH
| Fri, 19 Oct 2007 12:10:35 EST |
| This is insane, I have two mortgages with CW. They added their own insurance to my loan even though I was escrowing my taxes and insurance. The insurance they added was three times the policy I had. So if this is being done to all of their customers, I see why Mr. Mozilo's salary is 48 mil. WOW! Mr. Mozilo could care less what he is doing to the working single mom's like me. Shame on you Mr. Mozilo, what goes around comes back around. Nail him! |
|
| Above Posted By:
Steph
| Fri, 19 Oct 2007 03:31:59 EST |
| I sure hope he can sleep at night when he cashed in on all of this and left all of his emplyees unemployed. Most of them single moms who will not find a job in this industry for a long time to come. You have millions and they have nothing. Good for you Mozilo, I'm sure glad I don't work for you!! |
|
| Above Posted By:
T
| Thu, 18 Oct 2007 18:19:24 EST |
| This is another example of free market greed and corruption under the deregulatory schemes fostered by the neo-cons. I sincerely believe we should invoke capital punishment against these scoundrels!!! |
|
| Above Posted By:
Anonymous
| Thu, 18 Oct 2007 11:51:31 EST |
| I would agree that he should be held accountable if indeed he violated the preset trading plans. He has racked in a lot of money by selling his shares but in reality others would do the same. The market is unstable and for an almost 70 year old man who has made millions now would be a good time to get out and not have to worry about the continuing down fall of the market as a whole. |
|
| Above Posted By:
Raul
| Thu, 18 Oct 2007 10:22:20 EST |
| I hope they nail him and his cronies. That is ridiculous! |
|
| Above Posted By:
Anonymous
| Thu, 18 Oct 2007 08:39:42 EST |
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