Reuters- Three former executives at now-bankrupt lender New Century Financial Corp were charged with fraud by U.S. securities regulators on Monday, the latest government effort to pursue wrongdoing in the subprime mortgage market.
The U.S. Securities and Exchange Commission accused the three executives of trying to disguise New Century's rapidly deteriorating performance from investors while releasing weekly internal reports entitled "Storm Watch."
The 2007 failure of New Century, one of the largest independent providers of home loans to people with poor credit, rippled across the U.S. mortgage lending industry.
It was a forerunner of failures to come as lenders booked losses on billions of dollars of mortgages and mortgage-linked securities at the heart of the global financial crisis.
The SEC is seeking civil penalties and disgorgement of funds from former New Century Chief Executive Brad Morrice, former Chief Financial Officer Patti Dodge, and former Controller David Kenneally.
The action follows civil fraud and insider trading charges filed in June by the SEC against prominent banker Angelo Mozilo of Countrywide Financial, who built the largest U.S. mortgage lender.
The SEC said New Century sought to assure investors that its business was not at risk and failed to disclose dramatic increases in early loan defaults, loan repurchases and pending loan repurchase requests.
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