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Countrywide CEO Angelo Mozilo

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KAI RYSSDAL: New York Democratic Senator Charles Schumer might have let the cat out of the SEC's bag a bit sooner than regulators would have liked. It has been widely reported, but not yet confirmed, that the SEC's launched an informal probe of Countrywide CEO Angelo Mozilo for some questionable stock trades. Today Schumer put out a statement calling on the SEC to formalize that informal probe, and to include the company itself in the investigation. Both Mozilo and the company he founded have had a rough couple of months. Countrywide's been pummeled by the subprime crisis. Last month, it announced it was laying off 12-thousand employees. Just this week it said those layoffs are going to cost it a big chunk of money. From New York, Marketplace's Alisa Roth has more on Mozilo's problems.

Alisa Roth: The investigation centers around something called 10b5-1 trading plans. The SEC created these plans back in 2000. They let executives arrange for automatic sales of company stocks at regular intervals. Or under certain conditions.

Jonathan Moreland's an expert on insider trading. He says the idea is to prevent any whiff of illegal activity.

Jonathan Moreland: Frankly, it would be a bad general counsel who didn't advise his executives to sell via a 10b5-1 program. It is there to protect the executives against lawsuits, claiming that they're selling while in possession of material, nonpublic information.

Countrywide CEO Angelo Mozilo has used such a plan to sell company stock over the last couple of years. But a year ago, he started selling off more stock, more quickly. Now some people are asking whether there's something funny going on. Investors are wondering if Mozilo had insider information when he changed his plan.

Neither the SEC nor Countrywide will comment.

Joe Grundfest is a professor of law and business at Stanford. He says nobody's accusing anybody of anything yet.

Joe Grundfest: Look, it's part of a natural process of an SEC investigation and no one should draw any inference as to guilt or innocence from the simple fact that an inquiry has been opened.

He says depending on what it finds, the SEC could ask for subpoenas to continue its investigation, it could proceed without subpeonas, or it could drop the case altogether.

Press reports say the SEC is investigating about a dozen companies in conjunction with the subprime mess.

In New York, I'm Alisa Roth for Marketplace.

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