ailed online credit card issuer NextCard revealed it is under investigation by federal securities regulators. The SEC subpoenaed documents related to the case, and NextCard says it intends to fully cooperate with the investigation. The company also announced that its CEO, John Hashman, who oversaw the rise and fall of the company, officially resigned the first week of September 2002.

As reported in the July 22, 2002 (02:07:02) issue of The Green Sheet ("Better Luck Next Time, NextCard"), federal regulators forced the closure of 800,000 NextCard credit card accounts because of poor performance measures, lack of funds and an inability to find enough buyers for the accounts.

In February 2002, federal banking regulators began an investigation into the company's downfall. In May, the Federal Deposit Insurance Corp. told NextCard it might take legal action against several of the company's executives and directors.

Although Nasdaq de-listed NextCard's shares six months ago, the shares peaked at $53.12 in late 1999. A lawsuit filed by shareholders in Delaware charges NextCard insiders with illegally selling stock to lock in profits before the company's credit card portfolio failed.

NextCard's five top executives made $29.2 million by selling a combined 1.47 million stock options during 1999 and 2000, according to SEC filings reported by the Associated Press. Former Chief Operating Officer Timothy J. Coltrell collected $14.5 million when he sold 715,499 options in 1999 and 2000, and Hashman made $3.6 million by selling 305,000 during the same period.

NextCard also provided loans to many of its executives at an 8 percent interest rate in order to help executives pay for their tax and stock brokerage expenses, according to SEC records. As of June 2002, NextCard says the loans have been repaid, except for $120,000 owed by Hashman.

The FDIC has estimated that failure of NextCard's credit card business and the investigation could cost a taxpayer-backed insurance fund as much as $400 million. More than 800 of NextCard's employees have lost their jobs because of the disintegration.

The company does not know who will replace Hashman. With more than 90 percent of its workforce gone, NextCard is operating on barebones as its remaining management team contemplates filing for bankruptcy.