SEC v. Michael Strauss, Stephen Hozie and Robert Bernstein

SEC complaint against Michael Strauss, Stephen Hozie and Robert Bernstein


SEC filed this complaint against former senior officers at American Home Mortgage Investment Corp. The Commission alleges that Strauss and Hozie engaged in accounting fraud and made 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 they fraudulently understated American Home Mortgage's first quarter 2007 loan loss reserves and converted the company's loss into a fictional profit. In fact the company needed significant additional reserves. The analysis also showed that the company's losses on its delinquent second liens were mounting quickly and that American Home Mortgage would lose at least 72% of the value of these loans after the properties went through foreclosure.

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.

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Reference Info:Pleadings | Federal, 2nd Circuit, New York | United States

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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