March 03, 2007
Dot-com to dot-condo - company flame-outs, criminal investigations, and the disintegration of an industry. Subprime #2 New Century blows up
Damn I wish I had had the guts to short this one. Oh well, at least I pulled the trigger on LEND and CFC puts, two other big sub-prime lenders that are also flaming out. But damn, New Century is doing it IN STYLE!
Not only have they pets.com'ed on the stock side, not only have they helped bring the world financial markets to its knees last week, but noooooo, they're hitting the flame-out-trifecta, with the oh-too-predictable criminal investigation now underway.
Frog marches do earn the style points in my books. Bravo New Century! Bravo! Couldn't have scripted it any better. 10.0.
Now come the mass layoffs, the office closings, the shareholder lawsuits, and the "how could this happen" MSM stories. And NEW is just one of many. Here we go.
I think all the REIC insider-selling CEO stock manipulators are feeling more nervous by the day, and are probably thinking of making their get-away to Belize or Angola or somewhere pretty soon.
Right Angelo Mozilo (Countrywide)? Right Bob and Bruce Toll (Toll Brothers)? Right Bruce Karatz (KB Home)? Right Brad Morrice (New Century)? Right James Konrath (Accredited)?
SAN FRANCISCO (MarketWatch) -- New Century Financial Corp. said late Friday that it's facing a federal criminal probe and will likely breach a major lending covenant with its financial backers, bringing into question the survival of the second-largest U.S. subprime-mortgage lender.
The U.S. Attorney's Office for the Central District of California is conducting a federal criminal inquiry into trading in New Century securities as well as accounting errors, the company wrote in a regulatory filing late Friday.
The Securities and Exchange Commission also is looking into the company, as is the regulatory arm of the New York Stock Exchange, New Century disclosed. The company added that it is complying with all three inquiries.
Shares of New Century were down almost 25% in after-hours trading Friday at about $11, after falling more than 7% in the regular session to $14.65.
And this note on New Century's IR website today:
In light of New Century Financial Corporation's February 7, 2007 news release (New Century Financial Corporation to Restate Financial Statements for the quarters Ended March 31, June 30 and September 30, 2006), the financial information related to the quarters ended March 31, June 30 and September 30, 2006 should not be relied upon and is included on this Web site for historical archive purposes only.