Like Countrywide, New Century was one of the first subprime lenders to go belly-up, heralding the economic Armageddon the country may or may not be emerging from now. New Century’s bankruptcy spawned a months-long investigation by a court appointed examiner, who released an encyclopedic 581 page report on the calamity — all the way back in March 2008.
So after nearly two years, we were expecting something really explosive from the SEC. Perhaps counts against those executives that made exceptionally lucky stock trades after it was clear the business was circling the drain? Or some exquisite liability theory against KPMG, the company’s outside auditor that was intimately involved in its accounting practices?
See the goods, after the jump ...
"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," Robert Khuzami, the SEC's Director of Enforcement, said in a press release.
Essentially, the SEC cherry-picked some of the best bits from the examiner’s report and dumped it into a civil complaint. We wouldn’t be surprised if they tried to reach deals with some or all the defendants and failed, and we’re sure KPMG will be a central plank in each defense strategy.
But in the end, while they say plagiarism is the finest form of flattery, it shouldn’t take 20 months to learn copy and paste.
— Dan Levine