On March 8, 2011 the Court entered an order (the “Order”) sought by the Commission authorizing the establishment of a Fair Fund comprised of approximately $1.6 million dollars in disgorgement, post judgment interest and penalties paid by defendants Michael Strauss and Stephen Hozie. The Order provided that the Fair Fund would be distributed, net of a reserve for taxes, fees and expenses, to a sub-set of a certified class in a settled class action in the United States District Court for the Eastern District of New York, In re American Home Mortgage Securities Litigation, 07-MD-1898 (TCP) (E.D.N.Y.). The sub-set consists of all shareholders who purchased American Home Mortgage Investment Corp. (“AHM”) common and/or preferred stock on or after April 30, 2007, when AHM announced its earnings for the first quarter of 2007 and who held those shares through June 27, 2007, the day before AHM withdrew its earnings guidance and announced the establishment of additional reserves. The Order provides that the funds shall be distributed to the sub-set in accordance with the class action’s Plan of Allocation approved by the class action court’s January 14, 2010 order. These funds are now being distributed.
The Commission has settled with all defendants in this case. In its complaint, the Commission had alleged that Strauss and Hozie fraudulently understated AHM’s first quarter 2007 loan loss reserves by tens of millions of dollars, converting the company’s loss into a fictional profit. The Commission also alleged, among other conduct, that Strauss and Hozie made misleading disclosures concerning the company’s financial condition including misrepresenting the company’s liquidity and failing to adequately disclose the riskiness of the mortgages American Home Mortgage originated and held.
Article received from–http://www.sec.gov/litigation/litreleases/2011/lr22067.htm