SEC focusing on potential fraud by home builders

After being widely derided for being asleep at the switch while folks like Bernard Madoff gradually stole tens of billions of dollars from unwitting clients, the SEC is now targeting subprime lenders, hedge funds and home builders. Imagine what kind of mixer that group would throw! From a BuilderOnline.com story:

The U.S. Securities and Exchange Commission (SEC), which has been roundly chided for not uncovering several high-profile investment fraud schemes, is getting more aggressive.

It now has launched a series of investigations focusing on subprime lenders, hedge funds, and home builders.“The SEC is fully committed to addressing the [economic] crisis,” Elisse Walter, a SEC commissioner, told the House Financial Services committee last Friday. “To finding out what went wrong, punishing any wrongdoers, and returning as much money as possible to injured investors.”...

It appears that builders are being targeted for investigation partly because they (or their subsidiaries) are among the companies that, according to Walter, “provided retail mortgages to consumers.” However, Walter also noted that any investigation of builders might also entail “possible financial fraud, such as improper quarterly earnings management or improper recognition of revenue on model home sales and leasebacks, as well as improper related-party transactions.”

I think those last items are smoke screens. This is about potential mortgage fraud perpetuated by home builders -- a train that left the station long ago.