First Posted: 1/9/2013
(AP) Two KPMG auditors are facing charges of enabling managers at failed TierOne Bank to hide millions in losses during the 2008 financial crisis through flawed accounting procedures.
The Securities and Exchange Commission said in civil charges announced Wednesday that KPMG partner John Aesoph and senior manager Darren Bennett violated professional auditing standards by failing to demand accurate information from the bank.
The agency said the auditors relied on outdated appraisals provided by managers that inflated the value of real estate used as collateral for TierOne’s troubled loans. They also failed to properly examine the data before signing off on the bank’s 2008 financial statements, the SEC said.
The two could face fines or suspension from practice. Attorneys for Aesoph and Bennett didn’t immediately return telephone calls seeking comment.
TierOne, which was based in Lincoln, Neb., with about $2.8 billion in assets, understated its losses by millions in 2008 and 2009. Federal regulators closed the bank in June 2010 and sold its assets to Great Western Bank.
The SEC in September charged three former executives of TierOne the CEO, the president and the chief credit officer with concealing the losses from investors.
The SEC’s case against the two auditors will go before an administrative law judge at the agency. If the judge rules in favor of the SEC, the judge will determine what sanctions they could face.