Four former executives of a Delaware bank, including the chief financial officer (CFO), have been charged with disclosure fraud by the US Securities and Exchange Commission (SEC) over claims they deliberately understated some $351m (£230m) of overdue bank loans during the financial crisis in order to make the balance sheet look better
According to the SEC’s complaint, the former Wilmington Trust officials improperly excluded millions of dollars of overdue real estate loans from financial reports filed by Wilmington Trust in 2009 and 2010, violating a requirement to fully disclose the amount of loans 90 or more days past due.
The SEC complaint was filed in federal district court in Delaware on 6 May.
Andrew Calamari, director of the SEC’s New York regional office, said: ‘Corporate officials bear important responsibility for ensuring that corporate filings provide the investing public with accurate information about the company’s financial condition. We allege these defendants doctored a key financial metric to make it appear to investors that the bank was financially sound, when the reality was quite the contrary.’
The complaint names David Gibson, the bank’s former CFO, along with former chief operating officer and president Robert Harra, former controller Kevyn Rakowski, and former chief credit officer William North.
The former Delaware-based bank holding company was acquired by M&T Bank in May 2011 and paid $18.5m (£12.7m) in September 2014 to settle related SEC charges of improper accounting and disclosure fraud.
