US sub-prime lenders charged

The US financial watchdog has charged senior officers at one of the first and largest sub-prime lenders to collapse as the financial crisis took hold.

The US Securities and Exchange Commission today charged three former top officers of New Century Financial Corporation, which was one of the first dominoes to fall as the sub-prime lending crisis began in 2007.

The SEC accused New Century of misleading investors as its sub-prime mortgage business was collapsing in 2006.

The SEC believes New Century officers failed to disclose important information on dramatic increases in early loan defaults, loan repurchases, and pending loan repurchase requests.

The SEC also claims New Century officers manipulated accounting policies to allow the company to avoid substantial repurchase expenses and materially overstate its financial results.

Robert Khuzami, the SEC’s Director of Enforcement said New Century’s 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.

Read the full SEC statement:

SEC CHARGES FORMER OFFICERS OF SUBPRIME LENDER NEW CENTURY WITH FRAUD