Today the SEC charged former bank executives with misleading investors about mounting loan losses at San Francisco-based United Commercial Bank in 2008 and 2009 during the height of the financial crisis.
The SEC alleges that the bank’s former chief executive officer, chief operating officer and senior officer concealed losses on loans and other assets from the bank’s auditors, causing the bank’s public holding company UCBH Holdings Inc. to understate 2008 operating losses by at least $65 million (approximately 50 percent). Soon continued declines in the value of the bank’s loans led the bank to fail. The California Department of Financial Institutions closed the bank and appointed the FDIC as receiver. United Commercial Bank was one of the 10 largest bank failures of the recent financial crisis, causing a loss of $2.5 billion to the FDIC’s insurance fund.
Robert Khuzami, Director of the SEC’s Division of Enforcement, said, “Today’s charges reflect an all too familiar pattern – corporate executives once seen as rising stars embrace deception to avoid losses and conceal negative news, with investors and the FDIC insurance fund left to pick up the pieces, but accountability for these executives begins today.”
Today the U.S. Attorney for the Northern District of California announced parallel criminal charges against former employees of the bank, and the FDIC announced enforcement actions against 13 individuals for violations of federal banking regulations.
SEC Charges Bank Executives With Hiding Millions of Dollars in Losses During 2008 Financial Crisis