Former CFC VPs Charged by SEC
The Securities and Exchange Commissioned has charged two former Countrywide Financial Corp. executives with insider trading in a case that sprang from short trading of the company's stock just prior to the public release of disappointing financial results in October of 2004.
The SEC said that former Countrywide executives, Alan Cao of Woodland Hills, Calif., and Jun Shi of Moorpark, Calif., have agreed to pay a total of about $140,00 to settle the civil insider-trading charges.
The SEC alleges that the two traded Countrywide stock while aware of confidential information about third-quarter 2004 financial performance. Specifically, the two sold or shorted shares before Countrywide announced a decline in earnings and lowered its guidance, causing the company's share price to fall about 11% on Oct. 20, 2004.
The settlement required the two men to give up money improperly gained or saved in the transactions and pay a civil penalty. Mr. Cao's total penalty and disgorgement of profits totaled about $100,000 and Mr. Shi's totaled about $40,000.
In a statement, Countrywide emphasized that the two are no longer employed at the firm. The company did not provide details about when or under what circumstances they left.
Messrs. Cao and Shi neither admitted nor denied wrongdoing in agreeing to the SEC penalties. Edward Gelfand, an attorney for Mr. Cao, and Edward Gartenberg, an attorney for Mr. Shi, both declined to comment on the case when reached by MSN.
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