The Securities and Exchange Commission yesterday accused the former chief financial officer at Capital One Financial Corp. of insider trading for selling company stock when he knew banking regulators were on the verge of cracking down on the company for alleged supervisory lapses.

David M. Willey exercised 147,903 stock options and sold 60,219 shares of stock in the McLean credit card issuer in May 2002, shortly after he learned that Federal Reserve Board officials had uncovered "serious problems" in a review of Capital One's management and financial practices, according to a nine-page lawsuit filed in D.C. federal court. According to the SEC, the transactions were worth more than $3 million.

Willey, a Great Falls resident, resigned under pressure in March 2003 after the company publicly disclosed the SEC probe. His wife, Joy S. Willey, a former Capital One vice president who left the company in December 2002, was named in the lawsuit because David Willey made stock trades and generated undisclosed profit on her behalf, but she was not accused of actively taking part in the alleged wrongdoing.

"This case is an example of how you can even make money on bad news by engaging in a complex series of transactions in an employer's stock without sharing information with the other officers and directors," said Thomas C. Newkirk, an associate director of enforcement at the SEC.

According to regulators, Jon D. Greenlee, who was leading a Federal Reserve examination of Capital One, told Willey in a one-on-one meeting that regulators were likely to take action against the company because of problems with tracking financial information, mostly on Willey's watch. The SEC said Willey did not tell his superiors about the conversation.

Instead, between May 9 and May 13, 2002, Willey moved to purchase stock options that he and his wife held, then sold the shares in her account. Willey knew that the investigation was heating up and that soon Capital One would bar executives from selling company stock, according to the lawsuit. He also knew, the SEC claims, that his own stock options would expire within 90 days if he were to be fired as a result of Federal Reserve Board action against the company.

"The Willeys are disappointed that the SEC chose to initiate this action after an extended and constructive dialogue about their motivations and actions," said defense lawyer Richard J. Morvillo. "After these many months in limbo, the Willeys look forward to an early trial date and a favorable resolution."