SEC Enforcers Receive Recognition

Jack Humphrey, Regulatory journalist
October 20, 2011 /

Eight members of the US Securities and Exchange Commission staff have received the 2011 Award for Excellence in Investigations by the Council of the Inspectors General on Integrity and Efficiency (CIGIE).

The award was presented for outstanding cooperation in uncovering and jointly investigating the $2.9 billion fraud scheme that contributed to the collapse in 2009 of Colonial BancGroup Inc. and Taylor, Bean & Whitaker Mortgage Corp.

The SEC charged five individuals, including former Taylor, Bean & Whitaker chairman Lee Farkas, for allegedly arranging the sale of more than $1 billion of sham mortgage loans to Colonial Bank, and for allegedly trying to scam the U.S. Treasury Department’s Troubled Asset Relief Program (TARP).

Farkas was found guilty of related criminal fraud charges and was sentenced in June to 30 years in prison. This year, the SEC also charged Taylor, Bean & Whitaker’s former chief executive officer and former treasurer, and a former executive and former supervisor at Alabama-based Colonial Bank.

In October 19, 2011, the SEC charged Citigroup’s principal U.S. broker-dealer subsidiary with misleading investors about a $1 billion CDO tied to the housing market in which Citigroup bet against investors as the housing market showed signs of distress. Citigroup settled the SEC’s charges by paying a total of $285 million, which will be returned to investors.

In April 16, 2010, the SEC charged Goldman Sachs with defrauding investors by misstating and omitting key facts about a financial product tied to subprime mortgages as the U.S. housing market was beginning to falter.

In June 21 this year, the SEC charged J.P. Morgan Securities with misleading investors in a complex mortgage securities transaction just as the housing market was starting to plummet. J.P. Morgan agreed to pay $153.6 million in a settlement that enables harmed investors to receive all of their money back.

“We are extremely proud of our staff’s work on this important case, and delighted to see their efforts honored today,” said Robert Khuzami, Director of the SEC’s Enforcement Division.

“This award highlights the enormous individual and team effort to expose frauds stemming from the financial crisis and bring wrongdoers to justice.”

SEC employees receiving the award include Suzanne Ashley, Senior Counsel to the Director of Enforcement and former detailee to the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP)
Rhea Dignam, Regional Director, SEC Atlanta Regional Office; William Hicks, Associate Regional Director for Enforcement, Atlanta Regional Office; Barry Lakas, Staff Accountant, Atlanta Regional Office; Aaron Lipson, Assistant Regional Director, Atlanta Regional Office; Graham Loomis, Regional Trial Counsel, Atlanta Regional Office; Michael Mashburn, Senior Investigations Counsel, Atlanta Regional Office; and
Yolanda Ross, Senior Counsel, Atlanta Regional Office.

Other federal entities whose staff were honored with the award are the Department of Housing and Urban Development’s Office of Inspector General, the Federal Bureau of Investigation, the Federal Deposit Insurance Corp.’s Office of Inspector General, the Federal Housing Finance Agency’s Office of Inspector General, the Justice Department, the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), and the U.S. District Court for the Eastern District of Virginia.

 

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