In an article that reads like something out of “The Onion”, the Wall Street Journal reported today that Region’s Financial Corp. is investigating whether its executives misled shareholders about the health of subprime securities in 2007.  Region’s is investigating whether executives delayed the disclosure of loans that were failing before and during the financial crisis.  At issues is the practice of delaying negative reporting on loans and restructuring loans to make them appear as performing despite their substantial non-performance.  During an initial investigation of the bank and charges by the SEC, Region’s assured the public that any claims were “misdirected” and “inaccurate.”  However, it is looking like Region’s Financial is inching closer to a settlement for securities fraud in the range of $200 million.  Region’s Financial Corp., the nation’s 12th largest bank by assets, is the only bank still supported by the government aid given out in 2007.

While I do not find it surprising that executives would mislead shareholders and the board to protect their jobs (see Enron, Tyco, Worldcom, etc.), I find it ridiculous that Region’s would ramp up an investigation into their executives more than 4 years after the financial crisis.  I find it particularly egregious since Region’s has survived as a beneficiary of government aid and has yet to repay loans made by the government.  Any responsible bank board, and especially those that are publicly traded, should have done a thorough investigation of their own executive’s role in the financial collapse.  The fact that the board of Region’s is only now realizing the possible fraud by executives make them at best criminally negligent.  At worst, they are complicit in the fraud and should be held to the same scrutiny and charges by the SEC and other organizations.

If you or someone you know are a victim of predatory lending practices, such as a stated-income loans, contact our office today for a free consultation.  You may be able to rescind the loan and recover attorney’s fees and punitive damages.

 

Comments are closed.