fraud informationLarge holding Wilmington Trust Company associated with bank activity in Delaware and which was bought by M&T Bank in 2011 was accused of inaccurate bookkeeping and disclosure of overdue loans.

This was the statement made by the Securities and Exchange Commission on the 11th of September. The company did not submit a report about the number of loans which had increased since financial crisis upon the expiration of 90 days.

Financial frauds happen pretty often in spite of the strict regulation.

The years of 2009 and 2010 were marked with real estate market downgrade and construction loans as well as other short-term loans which were provided in this period were not repaid, besides target projects were also not completed.

According to the data obtained from SEC, the Wilmington Trust Company didn’t take any actions to refurbish or to prolong the loans during the following 90 days. According to the accounting legislation, the company was obliged to provide information disclosing the full amount of these matured loans but Wilmington Trust Company hid the data.

Wilmington Trust Company’s violations

  1. SEC’s investigation showed that in the last two-quarters of 2009 around $670 million of 90 days overdue loans were hidden by Wilmington Trust from the public financial report. The number of 90 days overdue loans for the third and fourth quarters of 2009 which was disclosed in the annual financial report by the company is just $69.3 million.
  2. The company also provided incorrect data concerning the quantity of non-accruing loans which were in the portfolio during the end of 2009.
  3. The reserve and allowance for loan losses were also played down for the last two-quarters of 2009.
  4. The following data was also forged in the first two-quarters of 2010.

Consequences and Punishment

SEC’s representatives explain that the action committed by Wilmington Trust hid the crucial credit quality metric from investors in the period of serious financial turmoil. All financial institutions should carry out all valid accounting norms and requirements.

As you know, the companies that deal with unsecured personal loans online also fall under certain regulations. Investors should be informed about difficulties which banks may be experiencing.

Director of the SEC’s department in New York Andrew Calamari expressed the thought that Wilmington Trust Company had misguided investors concerning the state of affairs in the field of real estate loan portfolio by its inaccurate accounting and overdue loans disclosure.

Wilmington Trust agreed with the charges by accepting the violation of Sections 17(a)(2) and 17(a)(3) of the Securities Act (adopted in 1933), as well as the violation of certain provisions of the federal securities laws.

The bank holding company will have to pay $18.5 million in jaundice interest to hammer down the Securities and Exchange Commission’s claim. Except financial liabilities, the company will refrain from the violation of any rules and norms in the future.

The investigation was made by SEC’s representatives in New York.