For the second time in two days, the Securities and Exchange Commission settled charges stemming from the sub-prime mortgage crisis.
The regulator Friday said three former officers of New Century Financial-one of the poster children of risky mortgage lending-settled charges that certain SEC filings contained false and misleading statements regarding its subprime mortgage business. The three individuals--Brad A. Morrice, the former CEO and co-founder; Patti M. Dodge, the former CFO; and David N. Kenneally, the former controller--agreed to pay out more than $1.3 million in disgorgement and penalties while agreeing to the terms of the settlement without admitting or denying the allegations in the Commission's Complaint.
The SEC alleged that New Century's second and third quarter 2006 reports and two late 2006 private stock offerings contained false and misleading statements regarding its subprime mortgage business. The complaint also claims that Morrice and Dodge knew about certain negative trends in New Century's loan portfolio from reports they received and that they participated in the disclosure process, but they did not take adequate steps to ensure that the negative trends were properly disclosed.