The big subprime lender disclosed Friday that federal prosecutors are conducting a criminal investigation into accounting errors and trading in the company's stock.
New Century, which has already announced it will have to restate financial results for the first three quarters of 2006 because of accounting errors, disclosed the probe in a filing with the
Securities and Exchange Commission
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late Friday. The company said it would assist investigators.
The filing also said New Century was delaying the filing of its annual 10-K report for 2006 because it wasn't able to file it by Thursday "without unreasonable effort and expense."
Irvine, Calif.-based New Century said it received notice of the criminal probe on Wednesday in a letter from the United States Attorney's Office for the Central District of California. The accounting errors that prosecutors are probing are related to the company's allowance for repurchase losses.
Subprime lenders like New Century make loans to people with poor credit. They have suffered as home prices have softened and defaults have risen.
In after-hours trading Friday, shares of New Century plummeted $3.73, or more than 25%, to $10.92. Earlier, they finished the regular trading session down $1.20 at $14.65.