Countrywide ( CFC) shares dropped 3% on reports that regulators are investigating the stock-sale bonanza being reaped by CEO Angelo Mozilo.

Citing people familiar with the matter, The Wall Street Journal reported after the market closed Wednesday that the Securities and Exchange Commission opened an informal investigation into Mozilo's stock sales.

Countrywide didn't immediately return calls seeking comment. The SEC, citing policy, didn't comment.

The news comes just a week after Richard Moore, North Carolina's treasurer, asked the SEC to investigate Mozilo's insider selling spree. Moore questioned the timing of changes made to Mozilo's executive stock sales plan.

"As one of many investors who have felt the painful losses in Countrywide stock, I am outraged at his manipulation of the system and this abuse of shareholders," Moore wrote in the Oct. 8 letter. "The timing of these sales and the changes to the trading plans raise serious questions about whether this is mere coincidence."

The SEC has said in recent weeks that it is making enforcement of the terms of the pre-arranged selling plans -- known as 10b5-1 plans -- a priority.

Mozilo has netted $100 million this year alone dumping his Countrywide stock, on top of $72 million in stock-sale gains last year. Meanwhile, shareholders in the Calabasas, Calif., mortgage lender have seen the value of their investment tumble by $14 billion since February.

Countrywide shares have lost more than 60% of their value since they peaked in February just before rivals such as HSBC ( HBC) and New Century Financial began warning about a spike in defaults on recent-vintage subprime loans.

Since then, Countrywide and rivals such as Thornburg ( TMA) have come under increasing pressure. The market for mortgage-backed securities that the companies long depended on for short-term financing has dried up, forcing Countrywide in August to tap a bank credit line to fund its daily operations. Thornburg has been forced to take similar actions, selling parts of its portfolio for a billion-dollar loss and selling preferred stock at high rates of interest.

Meanwhile, Mozilo has been busy selling his stock as fast as he can. Countrywide said earlier this month that even with all the stock Mozilo sold over the last year, he still had some options he hasn't cashed in -- in part because Countrywide shares had fallen below the threshold that triggered regular sales.

Mozilo took care of that, Countrywide said, by selling the rest of the stock covered under a pre-arranged selling plan at prices below the pre-set floor. Mozilo did concede in a press release back on Oct. 5 that the stock "is currently under pressure."

Countrywide shares fell 47 cents in after-hours trading to $16.88.

In keeping with TSC's editorial policy, Rappaport doesn't own or short individual stocks. She also doesn't invest in hedge funds or other private investment partnerships. She appreciates your feedback. Click here to send her an email.

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