As mortgages went bad, executives cashed out

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.

By William Heisel
November 26, 2008

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.