Doral-SEC Pact Imposes $25M Penalty

Doral Financial Corp., San Juan, Puerto Rico, has announced an agreement with the Securities and Exchange Commission under which the mortgage lender will pay a $25 million civil penalty in connection with the SEC's probe of Doral's restatement of financial results for 2000-2004.Doral said it agreed, without admitting or denying any wrongdoing, to be enjoined from future violations of certain provisions of the securities laws. "This agreement is a major step forward in resolving the legal and regulatory issues facing Doral," said Glen Wakeman, the company's chief executive officer. "We have implemented and will continue implementing improvements in our accounting, financial reporting, and corporate governance." Doral's restatement slashed $694.4 million from its retained earnings through the end of 2004 to correct the accounting for certain mortgage loan sales and the valuation of its interest-only strips. In March, the company signed consent orders with banking regulators that restrict its payment of dividends and require it to review its mortgage portfolio and submit plans on maintaining capital adequacy and liquidity.