The Big Board booted
Shares of the Irvine, Calif., subprime lender were suspended from trading on the New York Stock Exchange Tuesday. The NYSE says the firm, which has been cut off by its lenders and is under investigation by securities regulators and government prosecutors, will have to move its shares to the Pink Sheets.
New Century shares last traded at $1.66 after having lost more than 80% of their value in just over a week. The breakneck selloff came after New Century said it was in default on its deals with lenders and being investigated for its accounting. The NYSE had suspended trading Monday as it considered whether New Century would keep its listing.
This week, the company revealed that lenders including
Bank of America
have cut off its access to credit. Meanwhile, big banks that bought mortgage securities from New Century are seeking to make the firm buy them back. New Century says it doesn't have the money.
New Century and its subsidiaries do not "have sufficient liquidity to satisfy their outstanding repurchase obligations under the company's existing financing arrangements," the company said in a release about the trading suspension.
In another oops moment, New Century said Tuesday it had "incorrectly stated" the amount that it owed on mortgage repurchase obligations to Credit Suisse First Boston Mortgage Capital, a subsidiary of
. New Century owes the firm $1.4 billion instead of $900 million, it says.
Late last month, the U.S. attorney's office for the Central District of California said it was conducting a criminal inquiry in connection with the trading of New Century's stock as well as accounting errors in regards to its allowance for repurchase losses. New Century also received a grand jury subpoena from the U.S. attorney's office.
New Century has also received a letter from the Securities and Exchange Commission's Pacific regional office noting that it has begun a preliminary investigation and requested the "production of certain documents," according to a filing. The SEC has previously requested a meeting with New Century's management to "discuss the events leading up to the company's previous announcement of the need to restate certain financial statements."
New Century says it intends to cooperate with the SEC.
The subprime problems are taking a toll on many big and small lenders.
Since February, lenders such as
( NFI) and
reported financial setbacks tied to rising delinquencies and defaults. The government and big mortgage buyer
( FRE) announced rules aimed at tightening lending standards.
( FMT) announced plans to leave the subprime lending business after getting a cease-and-desist order from the FDIC.
And following New Century's footstep on Tuesday, shares of
Accredited Home Lenders
( LEND) sank after revealing that it was looking for funding and considering strategic options. Shares plunged 53%.
( CFC), one of the country's largest lenders, told investors on Monday that it expects some earnings volatility as a result of the subprime shakeout. The Calabasas, Calif., lender said it cut more than 100 jobs in its subprime wholesale lending unit.
Countrywide's stock fell 55 cents, or 1.6%, to $34.59.