Home / News / Government / SEC Charges Three Former Execs for Misrepresenting Bank’s Portfolio
Print This Post Print This Post

SEC Charges Three Former Execs for Misrepresenting Bank’s Portfolio

Three former executives of the Bank of Commonwealth based in Norfolk, Virginia were charged for understating millions in loan losses and hiding the state of the bank's portfolio, the ""Securities and Exchange Commission"":http://sec.gov/index.htm (SEC) announced in a statement.

[IMAGE]

Edward J. Woodard (former CEO, president, and chairman of the board), Cynthia A. Sabol (former CFO), and Stephen G. Fields (former EVP) were charged for allegedly misrepresenting the bank's deteriorating loan portfolio to investors.

[COLUMN_BREAK]

According to the SEC, public statements and SEC filings falsely from Commonwealth communicated the message that the bank's portfolio was conservatively managed according to strict underwriting standards.

Woodard, Sabol, and Fields were allegedly aware of the true condition of the portfolio but worked to hide the actual state. According to the SEC's complaint, the bank's allowance for loan and lease losses, or ALLL, was understated by about 17 to 25 percent from November 2008 to August 2010.

""During times of financial stress, it's more important than ever for executives to make full and honest disclosure to the investing public,"" said Scott W. Friestad, associate director of the SEC's Division of Enforcement. ""Commonwealth's executives did the opposite and hid the company's worsening performance from shareholders through masking practices that understated the losses on its most troubled loans.""

The bank was ""closed"":http://www.fdic.gov/news/news/press/2011/pr11153.html by regulators in September 2011. According to the FDIC, the bank had about $985.1 million in assets and $901.8 million in deposits when it failed.

The SEC's charges against the three execs include violations of antifraud, reporting, recordkeeping, internal controls, and deceit of auditors.

About Author: Esther Cho

x

Check Also

HUD Grants $150M to Tribal Communities for New, Affordable Housing

“Strong investments in Tribal communities help ensure residents can access much-needed safe and affordable housing,” said Secretary Marcia L. Fudge. “The funds HUD is making available will meet the challenges of today and allow Tribal communities to make innovative and vital advancements needed to prepare for the future."