Insider Information

Regulators took on the mortgage industry's best-known figure Thursday, accusing former Countrywide Financial Corp. Chief Executive Angelo Mozilo of hiding his alarm about risky loans the company was making at the height of the housing boom while he was reaping nearly $140 million in profits on stock sales.

Former Countrywide Financial Corp. boss Angelo R. Mozilo, whose embrace of exotic loans helped fuel the mortgage boom and meltdown, will face Securities and Exchange Commission fraud charges unless his lawyers prevail in an eleventh-hour appeal, people familiar with the SEC's investigation said Wednesday. Mozilo is among several former executives of the Calabasas company whom the SEC staff wants to charge in a civil case, one of these people said.

A former Goldman Sachs Group Inc. investment banking associate who helped mastermind a $6.7-million insider trading ring was sentenced Thursday to almost five years in prison for misusing information from an analyst, a juror and a magazine. Eugene Plotkin, who worked in the fixed-income research division of Goldman, the largest U.S. securities firm by market value, is one of two men who orchestrated a scheme to trade on secret tips from a Merrill Lynch & Co.

Countrywide Financial Corp. founder Angelo R. Mozilo defended his fortuitous stock trades before a congressional panel Friday, denying that he had manipulated his trading plan to unload about $141 million in stock options before the company collapsed. "You had good timing," needled Rep. Henry A. Waxman (D-Beverly Hills), chairman of the House Committee on Oversight and Government Reform.

Securities regulators have stepped up their investigation of mortgage giant Countrywide Financial Corp. and its former chief executive, Angelo R. Mozilo. Bank of America Corp., which acquired Calabasas-based Countrywide last month, said in a regulatory filing Thursday that the Securities and Exchange Commission was conducting a formal inquiry of the lender and that it had responded to subpoenas from the federal agency.

A former Restoration Hardware Inc. vice president agreed to settle U.S. regulatory allegations that he leaked inside information on a takeover bid to two friends while urging them to limit trades to avoid detection. Ciriaco "Eric" Rivor's tips were passed to one friend's father, who ignored the advice and amassed 248,600 shares in the home-furnishing chain before the deal was unveiled in November, the Securities and Exchange Commission said in a lawsuit filed in federal court in San Francisco.

A young former Merrill Lynch analyst caught in a sprawling, $7-million insider trading scheme must serve more than three years in prison to show Wall Street that sharing valuable inside secrets will not be met with leniency, a judge said Friday. U.S. District Judge Kenneth M. Karas said he was sending Stanislav Shpigelman, 24, of Brooklyn, N.Y.

Responding to a congressional inquiry, Hewlett-Packard Co. Chief Executive Mark Hurd said there was nothing devious about his decision to sell some of his holdings shortly before the Silicon Valley icon disclosed its role in a shady surveillance scheme that turned into a national scandal. In a Dec. 21 letter publicly released Friday, Hurd depicted his Aug. 25 sale of 100,000 HP shares as a part of a prudent financial plan designed to "offset my sizable holdings of HP stock and options."

A former Hewlett-Packard Co. executive was ordered to withdraw public claims in court documents that the company paid for inside information on Dell Inc. and sought to obtain his phone records improperly. Karl Kamb, a former Hewlett-Packard vice president, made the claims Jan. 19 in federal court in Tyler, Texas. Hewlett-Packard obtained a court order to have the claims withdrawn. If Kamb wants to make the accusations, he must file them under seal so they aren't open to the public, U.S.

Underscoring the growing clout of hedge funds, federal regulators are seeking to determine whether Wall Street stock brokerages routinely leak sensitive trading information to people running these investment vehicles.