This is just the epitome of disrespect to every stockholder, bondholder, lending partner, mortgage broker and borrower:
From an Associated Press story on Thursday:
NEW YORK (AP) -- The chairman and chief executive of mortgage lender Countrywide Financial Corp. exercised options for and sold 70,000 shares of common stock under a prearranged trading plan, according to a Securities and Exchange Commission filing Wednesday.
In a Form 4 filed with the SEC, Angelo R. Mozilo reported he exercised the options Wednesday for $9.94 apiece and then sold all 70,000 of them on the same day for $35.68 apiece.
The stock sale was conducted under a prearranged 10b5-1 trading plan which allows a company insider to set up a program in advance for such transactions and proceed with them even if he or she comes into possession of material non-public information.
I am beyond the point of polite critical analysis. Countrywide stock dropped to below $20/share on Thursday amid concerns that Merrill Lynch downgraded the stock to a sell. Merrill analyst, Bruce, felt that Countrywide may declare bankruptcy:
"We fear that the acceleration of margin calls and forced asset sales in the capital markets could lead to more problems for (Countrywide) to finance its mortgage operations," Merrill analyst Kenneth Bruce wrote in a research report. He furthered, "if liquidations (of assets) occur in a weak market, then it is possible for (Countrywide) to go bankrupt."
Spokespeople at the Cacabasas, Calif., lender weren't immediately available for comment. The stock, which has dropped 42% this year, recently declined $1.22, or 5%, to $23.24, a new 52-week low. Meanwhile, the perceived risk of owning Countrywide bonds also rose Wednesday.
The downgrade came despite repeated assurance by Countrywide officials that it has enough cash to survive the credit-market turmoil. During a recent conference call with analysts and investors, Countrywide Chief Executive Angelo Mozilo said, "We are certainly not going to have any issues funding the company," pointing to its "very conservative liquidity management philosophy" and "adequate, diversified, reliable sources of liquidity available." But he also said, "The pressure point would be short-term funding."
This is beyond reprehensible. The extra $1million Mr. Mozilo profited off of the "timely" transaction suggests that he is all about protecting his own family's money before ours. The Countrywide troubles have gone beyond bad luck and are starting to stink. It is virtually impossible for Mr. Mozilo to sell that stock Wednesday without knowledge of a potential downgrade.
Don't tell me it was for "estate planning purposes" or that it was planned; this borders on criminal behavior.