Capital One Financial Corp., one of the country's biggest credit card issuers, said its chief financial officer resigned after the Securities and Exchange Commission told him he could face civil insider-trading charges.

The SEC enforcement staff notified David M. Willey that it plans to recommend that the commission file a lawsuit against him alleging that he sold shares of Capital One ahead of a public announcement last July that drove the stock price down 40 percent.

"We're in the midst of a constructive dialogue with the SEC staff," said Richard J. Morvillo, Willey's attorney. "We hope to be able to persuade the staff that any charges against Mr. Willey would be unwarranted, but if the SEC decides to proceed with the case we're prepared to take this one the distance and defend this rigorously."

Capital One officials released a statement on Willey's resignation yesterday but declined to comment further, said company spokeswoman Liz Mather.

According to an SEC insider-trading form that Willey filed in December, he sold 50,875 shares of Capital One last May for more than $3.1 million. Willey's wife, Joy, a company vice president, sold 60,219 shares for about $3.7 million that same month. The couple acquired their shares through employee stock options. At the time, Capital One shares were trading near their peak of more than $64.

Two months after the sales, McLean-based Capital One reached an agreement with federal banking regulators that required the firm to raise its allowances for bad loans and improve some internal controls. Company shares plummeted more than $20 on the news, to about $30. Shares fell 9 percent, or $2.72, yesterday to close at $28.25.

"It's another embarrassment in a year full of embarrassments," said E. Reilly Tierney, an analyst with Fox-Pitt, Kelton Inc. "I just can't imagine a worse time for this thing to come up."

But analysts did not see Willey's resignation as a sign of broader troubles at the company.

"This seems to be more of an isolated event than a systemic problem," said Christopher C. Brendler, an analyst with Legg Mason Wood Walker Inc.

At issue is whether Willey used non-public information about Capital One's talks with banking regulators when deciding to sell his shares. Before the sale that May, Willey had last sold Capital One shares a year earlier, in May 2001. Throughout 2000 and 2001, Willey sold Capital One stock seven times. He made about $17.8 million, according to SEC filings.

"He exercises options on a regular basis," Morvillo said. "I'd say he has a regular course of practice."

According to SEC filings, Willey is the only top Capital One executive who sold shares last May, though two other insiders sold shares last March and April. Capital One chief executive Richard D. Fairbank, who has received stock options instead of a salary since 1997, last sold shares in May 2001.

Willey, who joined Capital One in 1989, earned $1.2 million in total cash compensation in 2001 and was granted options for about 380,000 shares of company stock that year.

Last month he received what is known as a Wells notice; the letter from the SEC staff informs a target of an investigation that it plans to recommend to commissioners that legal action be taken. The notice allows the subject of an investigation to submit to the commission a legal brief in his defense in an attempt to avert the legal action. Although occasionally a defense can sway the commission against legal action, successfully doing so is rare, said an attorney familiar with the process.

In its statement, Capital One said that no other executives received Wells notices and that the company is cooperating with SEC investigators.

An agency official declined to comment.

Willey was replaced as chief financial officer by Dave Lawson, the president and chief executive of Capital One Auto Finance, the company's car-loan subsidiary. Lawson joined Capital One in 1998, when the company bought Summit Acceptance Corp., a car-loan company that Lawson headed. Lawson holds the position on an interim basis, and Capital One has hired an executive search firm to find a permanent replacement.

"Willey was a distant third in terms of importance to the Capital One management team," said Brendler of Legg Mason. "I think the important thing for the company going forward is to get the fixed-income investment community comfortable with the new CFO."

Staff writer Ellen McCarthy and researcher Richard S. Drezen contributed to this report.