SEC Charges Bank Holding Company with Improper Accounting and Disclosure of Past Due Loans

The SEC announced accounting and disclosure fraud charges against a bank holding company for failing to report the true volume of loans that were at least 90 days past due, which increased substantially in number during the financial crisis.

An SEC investigation found that, as the real estate market declined in 2009 and 2010 and its construction loans began to mature without repayment or completion of the underlying project, the bank did not renew, extend or take other appropriate action for 90 days or more on a material amount of its matured loans. According to the SEC Order, instead of fully and accurately disclosing the amount of these accruing loans as required by accounting guidance, the bank improperly excluded the matured loans from its public financial reporting.

See: SEC Order.