Beneficial Corp.'s chief executive officer sold more than $5 million worth of company stock in the last days of May, and the finance company's chief financial officer has notified securities regulators he plans to sell nearly $6 million.
And late last week, executives of Mercury Finance Co. of Lake Forest, Ill., filed plans to sell 545,000 shares.
The sales come amid persistent reports of a rising tide of consumer credit problems, which could bite into profits at companies like Beneficial.
"This is the latest resurgence of insider selling in consumer finance- related companies," said Robert Gabele, president of CDA/Investnet, a Fort Lauderdale, Fla., firm that tracks insider trading data. In the first quarter, a wave of insider selling washed across the credit card industry.
"It is worth monitoring insider selling at companies whose fortunes are tied so tightly to the consumer" because signs are appearing that point to credit losses, Mr. Gabele said.
Between May 28 and 31, Beneficial chief executive Finn Casperson executed options on more than 89,000 shares and sold them all for between $58 and $59 each. He sold more than 100,000 option-related shares in February, making this his biggest year ever for insider selling.
Chief financial officer Andrew Halvorsen, in a filing with the Securities and Exchange Commission on June 3, said he would sell 99,000 option-related shares, his largest sale ever.
Mr. Gabele said the sales were notable because both stood out as personal anomalies for the Beneficial executives.
Recent economic data show an uptick in consumer credit problems, especially on credit cards (see story on page 1). Insider sales in the credit card companies rose in the first quarter amid earlier reports that showed consumers falling behind on their card payments.
The Mortgage Bankers Association is expected to issue a report citing a dramatic increase in the number of homeowners behind on their mortgage payments.
A Beneficial spokesman would not comment except to say that the executives' decisions were for personal reasons, and not a reflection on the company or anything else.
Much of the executives' compensation is based in stock, so it is to be expected that they would cash some of it out, said John Heffern, an analyst with Natwest Markets.
Mr. Casperson owns nearly two million company shares, so his sales are relatively insignificant, Mr. Heffern said. Mr. Halvorsen's sales are somewhat more meaningful because he owns fewer than 100,000 shares, the analyst said.
Other sources said Mr. Casperson needed the money to help finance the construction of a home in Teepack, N.J.
Anthony Marchese, a partner at Dimar Partners, which often bases its investment decisions on whether insiders are buying or selling, said that he is not particularly moved by option-related sales like those at Beneficial.
In a perfect world, Mr. Casperson would invest all his options in the company, Mr. Marchese said, but the reality is he has personal expenses. "Does it raise a red flag? Yes. Am I immediately worried about it? No."
Mr. Marchese said he is more interested in insider trading at Mercury Finance. A director, William C. Croft, bought 20,000 shares in April, the first insider buy in nearly 18 months at the company.
Mercury's stock has declined 20% to around $13 a share since September. The concerns about credit quality and falling revenues have hammered the company.
But Mercury is poised for a rebound, and Mr. Croft must recognize it, Mr. Marchese said.
Nonetheless, on June 6, the company's president, John N. Brincat, filed to sell 443,000 shares, and John N. Brincat Jr., a vice president, filed to sell 44,000 shares. Another vice president filed to sell 58,000 shares.
