Irvine-based subprime lender New Century Financial Corp. on Thursday said its 2005 earnings were likely significantly inflated due to accounting errors.
New Century had already said its 2006 earnings could no longer be relied upon because of similar errors. The latest disclosure could increase the odds that federal criminal and regulatory charges are levied against New Century, according to reports.
The accounting errors are tied to the reporting of loan repurchase losses, and the company’s valuation of some residual interests in securitizations, the company said in a SEC filing on Thursday.
A similar disclosure for its 2006 earnings, made in a February, caused the company’s stock to nosedive, leading to its April bankruptcy.
The company has no plans to restate either its 2005 or 2006 earnings since it is in the process of liquidating.
New Century has said at least 27 lawsuits have been filed against the company, its officers and directors.
