SEC Director of Enforcement Robert Khuzami said investors in the once publicly traded New Century "took a double-hit: The company's mortgage assets and business performance became increasingly impaired, and management manipulated its numbers and concealed its deteriorating performance."
At one time, New Century's shares traded for $50, New Century was a top-ranked subprime lender and at one point management was considering selling the company to Merrill Lynch. Then New Century filed for bankruptcy protection in April 2007.
Now the Securities and Exchange Commission has charged three former executives of now-defunct subprime mortgage giant New Century Financial with fraud for misleading investors as their business was "collapsing" in 2006.
Former top managers accused of fraud include Brad Morrice (Vice Chairman/President), Patti Dodge (EVP) and David Kenneally (SVP).
The complaint, filed in federal court in the Central District of California, seeks civil penalties and from Morrice and Dodge reimbursement of bonuses and other incentive or equity-based compensation. The agency is seeking a severe personal penalty against the three: a bar against ever again serving as officers or directors of a publicly traded company.
Josh Epstein, a spokesman for Proskauer, the law firm representing Mr. Morrice, told reporters that the SEC's charges against the former executive are "flatly false." He said, "Brad did all he could to save the company and to accurately report the company's numerous challenges to its shareholders. While his efforts failed, there was no fraud."
Morrice remained a large shareholder until the end, losing millions of dollars when New Century filed for bankruptcy in April 2007, Mr. Epstein said.
John Vandevelde, an attorney for Mr. Kenneally, said the former executive was never a top executive there but a new accountant who lost "every penny he ever invested" in the company he believed in. "Kenneally never signed any financial statements and relied on the outside auditors for accounting treatment now under question by the SEC," his lawyer said.
_______________________
Mortgage Loan Compliance® | A Certified Forensic Audit Company
Get The Facts on Your Loan and Protect Your Rights! | $59 Rapid Report Forensic Audits and $295 Certified Forensic Compliance Audits
Call 1-866-966-6615 or visit www.ml-compliance.com
No comments:
Post a Comment