A fascinating investigative report from the LA Times. There were millions to be wrung out of a failing subprime mortgage lender by its executives.
While Irvine subprime lender New Century was failing, key executives continually changed their stock trading plans and often sold within days of colleagues’ trades, a Times investigation shows.
The subprime lending industry was starting to buckle under the weight of bad loans in November 2006, when executives at Irvine-based New Century Financial Corp. held a conference call to release their latest earnings.
Loan volume was down and defaults were up, the earnings report showed, and in recent weeks at least five stock analysts had downgraded the company’s shares. Moreover, four executives had sold nearly $20 million in stock in the last four months, six times as much as they had sold over the previous 12 months.
“It’s just part of their personal financial diversification plan,” Chief Executive Brad A. Morrice said in response to the question during the Nov. 2 earnings call.