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Univ. of Toledo College of Law

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Wednesday, September 17, 2008

SEC Settles Aiding and Abetting Charges Against Former First Bancorp Executives

The SEC filed civil charges against Angel Alvarez-Perez and Annie Astor-Carbonell, former officers and directors of First BanCorp, a NYSE-listed bank holding company based in Puerto Rico, charging them with aiding and abetting violations of the federal securities laws by Doral Financial Corporation, another NYSE-listed bank holding company based in Puerto Rico. Alvarez was First BanCorp's Chief Executive Officer, and Astor was the company's Chief Financial Officer, during the relevant period.

According to the Commission's complaint, First BanCorp senior management, including Alvarez and Astor, concealed the true nature of more than $4 billion worth of mortgage-related transactions from the company's independent auditor and the investing public between 2000 and 2005. First BanCorp, which purportedly purchased the mortgages, is alleged to have profited from the transactions by earning over $100 million in net interest income with minimal risk. The contra-party to the transactions, Doral Financial, which purportedly sold the mortgages to First CanCorp, is alleged to have improperly recognized income from the transactions. The Commission further alleges that First BanCorp senior management, including Alvarez and Astor, created and backdated certain documents and affirmatively misrepresented the terms of certain mortgage-related transactions to the company's independent auditor to avoid a restatement in November 2004.

Without admitting or denying the Commission's allegations, Alvarez and Astor consented to being permanently enjoined from violating the federal securities laws. In addition, Alvarez consented to a five (5) year officer and director bar and $100,000 civil penalty, and Astor consented to a five (5) year officer and director bar, $75,000 civil penalty and to an administrative order suspending her privilege to appear and practice before the Commission as an accountant for five (5) years.

http://lawprofessors.typepad.com/securities/2008/09/sec-settles-aid.html

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