The US Securities and Exchange Commission (SEC) has charged three former executives of Bank of the Commonwealth for devaluing millions of dollars in losses and hiding the real condition of the bank’s loan portfolio during 2008 financial crisis.
The market regulator claimed that Edward Woodard, then CEO, president, and chairman of the board, CFO Cynthia Sabol and executive vice president Stephen Fields were responsible for misrepresentations to investors.
In order to keep reserved losses at minimum during economic turmoil, the bank showed that its portfolio of loans was conservatively managed according to strict underwriting standards.
Sabol was fully aware about the masking practices and its effects on the bank’s financial statements and disclosures; however she signed the disclosures and certified to the investing public that they were true.
Fields, who managed the bank’s largest portfolio of construction and development loans, was also involved in the masking practices.
Woodard, Sabol, and Fields have been charged with violations of antifraud, reporting, recordkeeping, internal controls, deceit of auditors, and Sarbanes-Oxley certification provisions of the federal securities laws.