Reuters: Bankruptcy News: UPDATE 1-U.S. SEC charges Thornburg executives with fraud

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UPDATE 1-U.S. SEC charges Thornburg executives with fraud Mar 13th 2012, 19:17 Tue Mar 13, 2012 3:17pm EDT WASHINGTON, D.C., March 13 (Reuters) - The U.S. Securities and Exchange Commission charged three former executives of Thornburg Mortgage with securities fraud on Tuesday and said they hid important information from investors at the onset of the financial crisis. Thornburg's chief executive, finance chief and accounting chief hid the company's deteriorating financial condition and overstated the company's income by more than $400 million in its 2007 annual report, the SEC said. The scheme occurred as Thornburg, a jumbo mortgage specialist now known as TMST Inc, faced a severe liquidity crisis that led to margin calls, the SEC said. In an email sent days before the company filed its 2007 annual report, for example, former chief accounting officer Jane Starrett sent an email to CEO Larry Goldstone and CFO Clarence Simmons, and said: "We have purposefully not told [our auditor] about the margins calls." All three were charged in the scheme. The plan backfired and the company lost 90 percent of its value in two weeks, the SEC said. Thornburg, one of the largest casualties of the U.S. housing crisis, filed for bankruptcy protection in 2009. The SEC lawsuit, filed in federal court in New Mexico, seeks to bar the executives from serving as officers or directors of public companies. It also asks a court to impose civil fines and disgorge profits from the conduct. Lawyers for the executives did not immediately respond to requests for comment. Link this Share this Digg this Email Reprints

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