Shares of New Century Financial Corp. were suspended Monday after news that creditors had pulled back financing the beleaguered company.
As part of an effort to investigate the subprime mortgage lender, the NYSE has begun the delisting process by halting shares amid a full investigation into faulty accounting practices that inflated the value of their loan portfolio.
New Century claimed that they weren’t keeping track of loan defaults, or missed payments, but the value of their loan portfolio was artificially boosted due to this omission.
Federal prosecutors and securities regulators opened the investigation two weeks ago, gathering documents to further examine the alleged accounting errors.
The U.S. Attorney’s Office for the Central District of California has also subpoenaed “certain documents” as part of the criminal proceedings, and the SEC has asked to meet with the company to discuss events prior to the accounting errors.
Along with the criminal investigation will come more bad news as past creditors seek lawsuits against New Century.
New Century shares will begin trading over-the-counter once the delisting is complete, although a bankruptcy is likely imminent in the near future.