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The Securities & Exchange Commission announced today that it has charged the former CEO, CFO, and controller of former subprime behemoth New Century Financial with securities fraud.Facing charges are former CEO and co-founder Brad A. Morrice, former CFO Patti M. Dodge, and former controller David N. Kenneally. All are accused of failing to warn investors about the risks in the company's business model, and of violating GAAP rules in making undisclosed accounting changes to mask the rapidly deteriorating performance of the company's subprime loans.
"New Century shareholders 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," said Robert Khuzami, the SEC's Director of Enforcement.
At its peak, New Century was the second largest subprime lender in the United States, employed Bob Vila as a spokesperson, and was listed on the NYSE with a market cap close to $2 billion. New Century's bankruptcy filing on April 2nd of 2007 (narrowly escaping the distinction of filing for bankruptcy of April Fool's Day) was an early warning sign of the financial crisis that was emerging.
The SEC noted in its press release that it has been aggressively pursuing enforcement cases related to the subprime disaster including "Countrywide Financial CEO Angelo Mozilo, and senior executives, including the CEO, of American Home Mortgage Investment Corp."
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Reader Comments (Page 1 of 1)
12-11-2009 @ 5:05AM
therese.becker said...
I hope these people get the full extent of the law thrown at them and they lose everything they have to their name like so many of the families they affected. Icing on the cake they do time also. They have no idea what damage they did nor do they care who they hurt in the process. They are still sitting on a ton of the former employees hard earned dollars. And they have not had to witness a single day of the devastation they caused. My husband and I lost everything, and are years from recovering. We lost our home. We had to use all our savings to live on while my husband looked for 2 years for a job, because they claimed bankruptcy before they paid him his severance package. We owe thousands in taxes, because we had to take out our stock the day he was let go to live off of. He had no notice of being let go. He went into work and was escorted out of the building 10 minutes later. He was a Sr. Vice President at the time. We have 3 children, one we are trying to put through college, and are barely making ends meet. All I want for Christmas is for them to suffer the way they have made so many others suffer. I know Brad and Patti personally my husband worked for them and I can't believe they could do this to the loyal, hard working people they had at New Century. They make me sick!!