WASHINGTON (AP) -- Three top executives at a New York investment firm have agreed to pay thousands of dollars in penalties to settle Securities and Exchange Commission charges that they overstated their company's assets during the financial crisis.
The SEC said Thursday that its investigation found that KCAP Financial Inc. did not account for certain market-based activity in determining the fair value of its debt securities and certain collateralized loan obligations. In addition, the company failed to disclose that the fund had valued its two largest collateralized loan obligation investments at cost, the SEC said.
KCAP's CEO Dayl Pearson and chief investment officer R. Jonathan Corless were largely in charge of calculating the fair value of KCAP's debt securities, while the company's former CFO Michael Wirth was responsible for calculating the fair value of KCAP's collateralized loan obligations.
As part of the settlement with the SEC, Pearson and Wirth each agreed to pay $50,000 penalties and Corless agreed to pay a $25,000 penalty. KCAP said that the company itself will not pay a penalty.
In a statement released by the company, Pearson noted that the investigation was related to matters that occurred in the wake of the 2008 financial crisis and the adverse effect that it had on the value of the company's investments. He added that in 2010 the company boosted its valuation methodology and procedures to take into account market-based activity.
The company and the executives did not admit to or deny the SEC findings, but consented to the SEC order requiring them to stop committing or causing any violations, or any future violations, of the federal securities laws in question, the SEC said.
KCAP shares fell 9 cents to $8.66 in afternoon trading.