WASHINGTON Jan 9 U.S. securities regulators on
Wednesday accused three former executives at a Virginia-based
bank of understating losses and masking the bank's true health
at the height of the financial crisis.
The three top executives of the Norfolk-based Bank of the
Commonwealth were responsible for consistent messages that it
conservatively managed its portfolio of loans, which accounted
for some 94 percent of the company's assets in 2008, the
Securities and Exchange Commission said.
Chief executive Edward Woodard, finance chief Cynthia Sabol
and executive vice president Stephen Fields knew the bank's
portfolio was rapidly deteriorating yet worked to hide those
problems from the earnings releases of parent company
Commonwealth Bankshares Inc, the SEC said.
The bank failed in 2011 and was acquired by Southern Bank
and Trust Co.
"During times of financial stress, it's more important than
ever for executives to make full and honest disclosure to the
investing public," Scott Friestad, associate director of the
SEC's enforcement division said in a statement.
Through a complaint filed in federal court in Virginia, the
agency seeks to bar the executives from serving as officers or
directors of public companies and obtain penalties.
"Based on our investigation, we are convinced Ed Woodard
committed no violations of the securities laws, so we are
disappointed that the SEC feels it needs to take this step, but
we intend to vigorously oppose" the lawsuit, said Andrew Sacks,
a lawyer for Woodard.
Attorneys for the other defendants were not immediately
available for comment.