Execs Cashed Out as Subprime Giant Staggered

Irregular trades by execs at doomed subprime firm raise questions
By Rob Quinn,  Newser Staff
Posted Nov 26, 2008 9:10 AM CST
Headquarters for New Century Financial Corporation in Irvine, Calif. which filed for bankruptcy protection Monday April 2, 2007.    (AP Photo/Lenny Ignelzi)
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(Newser) – Bosses at one of the country's biggest subprime lenders made some suspicious stock sales as the firm's mortgages soured, a Los Angeles Times investigation reveals. Records show that executives at now-bankrupt New Century Financial sold nearly $20 million in company shares shortly after setting up new trading plans, often within days of each other. Such behavior "raises a red flag" for prosecutors, one expert said.

No charges have yet been filed against the execs but a source tells the Times that the trades are at the center of the Justice Department's ongoing criminal investigation of New Century. Ex-prosecutors predict that public outrage over the $700 billion bailout—and the resulting focus on executive compensation—will likely expand probes like the one into New Century's dealings across the financial industry.