A month ago, I suggested that Countrywide Financial Corp. (NYSE:CFC) could be this year's version of Enron. One reason: Enron's Ken Lay and Countrywide's CEO Angelo Mozilo both publicly boosted their companies' prospects as they dumped their shares.
Today's New York Times [registration required] seconds that motion by reporting that North Carolina's Treasurer, Richard Moore, has asked the SEC to investigate Mozilo's $132 million in stock profits -- which he took as Countrywide traded above $40 -- it's now trading at $18.80 -- right before the subprime mess heated up starting in October 2006.
Moore's letter expressed his anger: "As an investor and a Countrywide shareholder, I was shocked to learn that C.E.O. Angelo Mozilo apparently manipulated his trading plans to cash in, just as the subprime crisis was heating up and Countrywide's fortunes were cooling off." How is this like Enron's Ken Lay? As I posted before, Ken Lay sold about $100 million worth of shares even as he was telling Enron employees what a great investment its shares were.
Will the SEC investigate? Will Mitt Romney keep Mozilo's campaign contribution? Stay tuned for the next episode.
Peter Cohan is President of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in Countrywide securities.
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