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Legal Accountability - Bringing the Self-Righteous, Negligent Corporate Officers in Line

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May 15, 2008 – Comments (5)

Yippie...

This one is saying the executives of Countrywide must face a lawsuit to go after their wealth for their negligence.   

“As institutional investors, it is our duty to seek recourse when a company’s directors engage in practices that are not in the best interests of shareholders,” said Christa S. Clark, chief legal counsel of the Arkansas Teacher Retirement System, the lead plaintiff in the case. “We are pleased with the court’s ruling as it enables the shareholders to move forward with our case and remedy this wrong.”

The plaintiffs in the case said they hoped to recover money for shareholders from Countrywide officials named in the case who sold $850 million in stock from 2004 to 2007. The plaintiffs contend that the directors and officers dumped shares even as the company spent $2.4 billion to repurchase its own stock in late 2006 and early 2007.

The chief executive of Countrywide, Angelo R. Mozilo, has argued that his $474 million in stock sales during the three-year period complied with securities laws under a planned selling program. But he revised the program, known as a 10b5-1 plan, several times, each time increasing the shares to be sold.

As a result, the judge wrote: “Mozilo’s actions appear to defeat the very purpose of 10b5-1 plans,” created to allow corporate insiders to sell stock regularly and without direct involvement.

I simply do not see any defense of the Countrywide directors over what happened and what they did.   They clearly destroyed a company and investor wealth for personal gain, imho.

 

5 Comments – Post Your Own

#1) On May 15, 2008 at 9:24 AM, dwot (51.92) wrote:

At the same, having them face criminal charges for fraud and throwing them in jail would be lenient.  They are the bigger players in what ails the financial markets and the fallout is utterly enormous. 

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#2) On May 15, 2008 at 10:30 AM, TMFBent (99.81) wrote:

I believe someone at the SEC did a study showing that these Stars plans actually allowed officers to "trade" on material non-public information with amazing regularity, and that the plans were, in a large number of cases, working exactly opposite of the intended purpose.

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#3) On May 15, 2008 at 11:24 AM, leohaas (31.55) wrote:

Finally. Going after corporate officers where it really hurts: their money. Maybe if this law suit has success, officers in the future will be less cavalier.

I cannot wait for the libertarian blog hoggers to tell us all how this is the way the system is supposed to work: no regulation, the thread of a crippling law suit is enough to keep people (yes, corporate officers are in this category) in check!

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#4) On May 16, 2008 at 9:26 PM, LordZ wrote:

I'm not going to say that im informed as to the facts of the case and situation, however knowing how power corrupts it wouldnt surprise me if these guys manipulated the markets and worked the system to their benefits allowing them to sell their shares while having the company buy back program support their abilities to dump their shares and not have it immediately affect the stock price. Any one notice how strong of a sun tan that mozilla baffoon is sporting. Meanwhile the guy at BSC was playing bridge while his company was tanking it.

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#5) On May 16, 2008 at 9:28 PM, LordZ wrote:

Organizations are constantly rising and falling based upon the qualities and strengths of the Leaders in their organizations.

What a total lack of leadership CFC and BSC ~ thus both companies have fallen.

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