A Securities & Exchange Commission (SEC) investigation into the practices of former executives at Los Alamos National Bank led to a substantial settlement ($1.5 million) to resolve fraud charges. According to local reports from the Albuquerque Journal, the SEC investigated Trinity Capital Corporation, the bank’s holding company. The bank and Trinity cooperated with the SEC, and per the terms of the settlement, neither entity admitted to wrongdoing.
In 2013, a Federal Comptroller imposed regulatory restrictions on Los Alamos National Bank for “unsafe or unsound banking practices.”
The SEC alleged that “Trinity understated its reported 2011 net loss available to common shareholders by $30.5 million, reporting income of $4.9 million instead of $25.6 million loss.” Bank executives – including Mark Pierce, a lending officer; Jill Cook, a credit officer; and Bill Enloe, the CEO – also face federal fraud charges.
As part of the arrangement, Enloe will pay $250,000 in penalties and will not be able to work as an officer in a public company for five years. According to the SEC, other bank officers — including Karl Hjelvik, the bank’s vice president and Daniel Bartholomew, the CFO — failed to create proper accounting protocols to ensure the accuracy of Los Alamos’ records. They cooperated with the SEC to build a case against Cook and Pierce for “lying to auditors,” engaging in fraud and violating regulations.
The director of the SEC’s Division of Enforcement, Andrew Ceresney, hypothesized that Trinity “grossly misreported its income to shareholders and regulators” in order to free the bank from the Comptroller of the Currency’s supervisory agreement.
SEC Investigation Attorney Explains Basic Elements of Process
The Enforcement Division helps the SEC enforce the law by identifying possible legal violations. Tips come from diverse sources, including insiders (whistleblowers), the media, surveillance, and organizations tasked with regulating industries and looking for inconsistencies and red flags. Common causes for action include allegations that a company has manipulated investors or the market, intentionally omitted critical details about a security, or engaged in insider trading.
After a private investigation, the Commission can decide to pursue a trial with U.S. District Court to obtain a result, such as sanctions against a company or injunctions to prevent the company from continuing to engage in certain activities or to audit or supervise; or it can file an Administrative Action with an Administrative Law Judge seeking sanctions. In some cases, the Commission may seek redress with both a Civil Action and an Administrative Action, depending on the nature of the allegations, the scope of the damage, and the company’s willingness or ability to cooperate.
How to Respond to Your Company’s Charges
Does your corporation face complex allegations of regulatory noncompliance, fraud or other corporate wrongdoing? An experienced SEC investigations attorney like J. Patrick Quillian can help your team and your in-house counsel develop a robust, ethical and effective plan of action to protect company interests and obtain a fair result. Please call or email us for a confidential consultation to unwind the damage caused by allegations of fraud or other corporate wrongdoing.