Schapiro's Head Fake-2

"The [SEC] on Monday accused three former executives at the now-defunct company of hiding losses as homeowners began missing mortgage payments. The claims, made in a civil suit filed in the Central District of California, come two years after New Century [NC] buckled under the weight of its bad loans. ... The SEC claims that Brad A. Morrice, the company's former chief executive, and two other senior executives received dire warnings about their company's prospects in weekly 'Storm Watch' reports from employees but assured [NC] investors that the company was sound. ... Mr. Morrice, through his lawyers, denied any wrongdoing. In a statement, he said he had lost millions of dollars on his stock investments in [NC] and had done all he could to avert the company's collapse. ... Also charged with accounting and securities fraud were Patti M. Dodge, [NC's] former chief financial officer, and David N. Kenneally, the company's former controller. Regulators are seeking financial restitution for investors who were defrauded as well as fines, but are also aiming to claw back more than $7 million in bonus and other incentive payments received by Mr. Morrice and Ms. Dodge", Zachery Kouwe at the NYT, 8 December 2009, link: http://www.nytimes.com/2009/12/08/business/08mortgage.html.

"John Vandevelde, a lawyer for Mr. Kenneally, said his client was never a senior officer of the firm and 'always relied on the fully informed advice of the outside auditors.' ... A court-appointed examiner looking into [NC's] collapse found in 2008 that KPMG, the company's accountant, 'contributed' to some of the accounting and financial reporting strategies. At the time, KPMG said it strongly disagreed with the report's conclusion. KPMG declined to comment further Monday. ... 'This shows our focused effort to pursue and scrutinize those who dealt in or sold or created mortgage-related structures regardless of vehicle they used,' said Robert Khuzami, the SEC enforcement director", Kara Scannell at the WSJ, 8 December 2009: http://online.wsj.com/article/SB10001424052748704825504574582102923058362.html.

No Morrice. You had to put a "former" NC executive in as US Treasury Secretary. Well Schaprio, when will you try to get similar restitution from Lloyd Antoinette Blankfein and David Viniar at Vampire Squid (VS)? I last commented on NC on 13 April 2009: http://skepticaltexascpa.blogspot.com/2009/04/kpmg-sued.html.

I'll believe Khuzami when I see VS's officers get the same treatment.