Huge surprise: the SEC is mobilizing to sue sue former Countrywide Financial CEO Angelo Mozilo for insider trading.
Perhaps no one made so much money so directly perpetrating the abuses responsible for the most painful consequences of the economic collapse as Mozilo, whose massive mortgage giant encouraged sales reps to sell homeowners on the biggest and most abusive loans possible, fueling a meteoric rise in housing prices that sustained Countrywide’s profit margins for much of the last decade — until 2007, when the market finally broke down and Countrywide tried to change tactics, raising its lending standards with an internal memo encouraging employees to “Do the right thing.”
That memo was instantly parodied by Countrywide employees, who posted and circulated an alternate version that ended:
P.S. My naked orange body is rolling around in piles of hundreds of millions of dollars from the stock I’ve dumped.The first of innumerable shareholder lawsuits alleging insider trading was filed shortly thereafter.
The focus of the probe into Mozilo are three alleged changes he made in late 2006 and 2007 to increase the number of shares sold under his “automatic sale” plan — during a time period during which Countrywide was engaged in a stock buyback program that kept the company’s stock price supported. (Mozilo has repeatedly claimed he was simply“saving for retirement.”)
Mozilo also claimed on a company conference call in July 2007 that he was only selling options with expiration dates, something investors claim was a lie.
In October 2008 Bank of America, which had purchased the troubled mortgage lender the year earlier, settled a predatory lending suit filed by attorneys general in various states for an awe-inspiring $8.6 billion.