Sen. Schumer urges SEC expand Countrywide probe

WASHINGTON (Reuters) - Sen. Charles Schumer, a New York Democrat, said on Thursday an investigation of Countrywide Financial Corp's chief executive should be expanded to include the company.

The Securities and Exchange Commission should "expand its informal probe of suspicious stock sales by Countrywide CEO Angelo Mozilo to include the company itself, which may have taken steps to enable Mozilo's stock dumping as the subprime crisis heated up and Countrywide's stock prices plunged," Schumer said in a statement.

The request comes after reports surfaced the SEC has opened a probe into Mozilo's stock sales and adds to the growing woes at the nation's largest mortgage lender.

Schumer asked the SEC to look at whether Countrywide tried to push up the stock price for Mozilo and whether the company misled investors by failing to disclose that Mozilo was misusing an SEC provision to dump his shares.

At issue is Mozilo's use of an SEC rule known as 10b5-1 that allows corporate executives to file a trading plan for future sales of their stock. The plans are intended to prevent suspicions that executives illicitly traded on insider information.

"Did Countrywide repeatedly adjust Mozilo's prearranged selling plans at his request, such that the intent and purpose of these plans -- the prevention of insider trading -- was undermined?" said Schumer.

An SEC spokesman declined to comment. The SEC has said it is looking at the plans and possible abuses.

Countrywide shares closed down 4.8 percent at $16.51 on the New York Stock Exchange.

(Reporting by Kevin Drawbaugh, Rachelle Younglai)