Closing In on Countrywide's C.E.O.?

Another Countrywide Financial executive has settled insider-trading charges brought by the Securities and Exchange Commission. That makes three so far. Does this increase the odds that C.E.O. Angelo Mozilo will take a fall?

Former Countrywide vice president Quan Zhu, 43, of Santa Monica, California, agreed to pay $108,840 to settle civil allegations that he used advance knowledge of poor results at the company to sell shares and buy put options.

The S.E.C. says his actions let him avoid losses and reap gains totaling $35,547.93. Zhu neither admitted nor denied the allegations.

Zhu's settlement follow similar deals struck by Alan Cao, a vice president of financial planning, and Jun Shi, another Countrywide vice president, in March 2006.

In its complaint, the S.E.C. said Cao had told Zhu and Shi in mid-October 2004 that the company would miss the consensus earnings estimate of Wall Street analysts. Zhu began selling shares and buying put options on October 15.

On October 20, Countrywide announced that its third quarter earnings were $0.94 per share, less than half the $1.93 posted a year earlier. Countrywide's stock price fell 11.5 percent on the news.

Separately, the S.E.C. has opened an informal inquiry into Countrywide Chairman and C.E.O. Angelo Mozilo's stock sales.

Mozilo has had gains of $132 million since starting a stock-sale plan in October 2006, according to the New York Times.

The state treasurer of North Carolina, Richard H. Moore, has questioned changes to the stock program that allowed Mozilo to increase significantly his sales of Countrywide shares.

Mozilo, American Banker magazine's banker of the year in 2006, said recently that he was cooperating with the S.E.C. He added that he hadn't made any trading decisions based on material, nonpublic information about the company.

by Mark Stein

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