Thirteen former officers and directors of New Century Financial Corp., have agreed to pay more than $90 million to settle all civil claims in a series of federal and private lawsuits stemming from the collapse of the once high flying subprime giant.
The agreement settles class-action lawsuits brought by investors, a suit by a private equity firm, a claim filed by the trustee in New Century's bankruptcy case and a lawsuit brought by the Securities and Exchange Commission against three former New Century executives, according to a report in The Los Angeles Times.
In the second half of 2006, the company raised $142.5 million by selling stock to new investors, the SEC suit noted. "These investments were wiped out as New Century's fraud was revealed to the public" in 2007, the SEC charged. (At one time, Merrill Lynch was looking to buy the company.)
In settling, none of the defendants admitted wrongdoing. New Century co-founder Brad Morrice said in a statement that he hoped the settlement "would make up for some of the losses suffered and provide closure to me and the shareholders." Morrice, a former CEO of the company, was one of the three who were sued in December by the SEC. The agency accused them of concealing the company's deteriorating financial condition in the period before it collapsed.
As part of the settlement, all three agreed to be banned from acting as officers and directors of any public company for five years. The Times reported that Morrice agreed to pay the SEC $464,354 in allegedly ill-gotten gains, plus $76,991 in interest and a $250,000 fine. Patti M. Dodge, a former chief financial officer, agreed to pay $379,808 plus $70,192 in interest, and pay a $100,000 civil penalty. Former controller David N. Kenneally agreed to pay $126,676 with $23,324 in interest and a $32,500 civil penalty.
