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SEC LITIGATION RELEASE
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EXTRACTED KEY WORDS
REPORTS HOMESTEAD LOAN PORTFOLIO SECURITIES EXCHANGE COMMISSION DISTRICT PROVISIONS COMPLAINT UNITED STATES JUDGEMENT ALLEGES LOSSES ACCOUNTING STATES DISTRICT COURT COLUMBIA OFFICER ENJOINS HOLMAN INCOME RECKLESS KNOWING PROPERLY ACCOUNTING ESTIMABLE LOSSES PUBLIC FILINGS MISLEADING DISCLOSE MANAGEMENT LOAN LOSS PROVISION DRAMATIC DETERIORATION REAL ESTATE LOAN |
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 14808 / February 1, 1996
Accounting and Auditing Enforcement
Release No. 756 / February 1, 1996
Securities & Exchange Commission v. Gary L. Holman
(United States District Court for the District of Columbia, Civil
Action No. 95-CV-01801)
The Securities and Exchange Commission announced that on
January 23, 1996, the Honorable William B. Bryant of the United
States District Court for the District of Columbia entered a
Final Judgment and Order against Gary L. Holman, former president
and chief executive officer of Homestead Holding Corporation, a
defunct savings and loan, formerly headquartered in Middletown,
Pennsylvania. The Final Judgment permanently enjoins Holman from
future violations of the antifraud, books and records and
reporting provisions of the federal securities laws, and enjoins
Holman from acting as an officer or director of a reporting
company for a period of five years. Holman consented to the
Final Judgment and Order without admitting or denying the
allegations in the Commission's Complaint.
The Commission's Complaint, which was filed on September 20,
1995, alleges that in 1990, Holman caused Homestead to file
annual and quarterly reports with the Commission containing false
financial information. The financial statements contained in
these reports failed to include adequate provisions for probable
losses in Homestead 's loan portfolio, causing Homestead's income
reported therein to be materially overstated. For the year ended
December 31, 1989, Homestead reported income before taxes of $3.4
million. This figure was overstated by approximately $2.7
million, inasmuch as it omitted significant provisions for
probable or anticipated losses within Homestead's loan portfolio.
The Complaint alleges that Holman knew, or was reckless in not
knowing, that Homestead was not properly accounting for probable
and estimable losses in its loan portfolio, and therefore that
the financial statements contained in Homestead's public filings
were false and misleading.
The Complaint also alleges that Homestead, at Holman's
direction, also failed to disclose, in the Management Discussion
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