Tuesday, April 28, 2009
On April 28, 2009, the SEC filed a civil action in the United States District Court for the Southern District of New York against former officers at American Home Mortgage Investment Corp., Michael Strauss, Stephen Hozie and Robert Bernstein, charging them with engaging in accounting fraud and making false and misleading disclosures that were designed to conceal from investors that American Home Mortgage's financial condition and prospects had significantly worsened in the first four months of 2007.
.The complaint alleges that Strauss and Hozie violated the antifraud provisions of the federal securities laws. The complaint further charges (i) Strauss and Hozie with aiding and abetting American Home Mortgage's violations of Section 10(b) and Rules 10b-5 and 13a-11 of the Exchange Act; (ii) Strauss, Hozie and Bernstein with aiding and abetting American Home Mortgage's violations of the reporting, books and records, and internal control provisions under Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 12b-20 and 13a-13 thereunder; and (iii) Strauss, Hozie and Bernstein with direct violations of Section 13(b)(5) of the Exchange Act and Rules 13b2-1 and 13b2-2 thereunder. Finally, the complaint charges Strauss and Hozie with violations of the officer certification provisions under Rule 13a-14 of the Exchange Act. The Commission's complaint seeks permanent injunctions against future violations, disgorgement of ill-gotten gains plus prejudgment interest and the imposition of civil penalties. The complaint also seeks officer and director bars against Strauss and Hozie.
Strauss has agreed to settle the SEC's charges without admitting or denying the allegations. He will be permanently enjoined from violating the antifraud, reporting, record-keeping, and internal controls provisions of the federal securities laws and will pay approximately $2.2 million in disgorgement and prejudgment interest and a $250,000 penalty. Strauss will also be barred from serving as an officer or director of a public company for five years. The litigation is ongoing with respect to the other defendants.