Angel Oak Capital Advisors (Angel Oak) agreed to pay a $1.75 million settlement to the U.S. Securities and Exchange Commission (SEC). And portfolio manager Ashish Negandhi will settle the charges for $75,000.
The firm is the investment management arm of non-QM lender Angel Oak Companies. The Atlanta-based firm is one of Georgia’s fastest-growing companies. And its lending platform set records in 2021.
The SEC alleged the company misled investors in the 2018 private-label securitization. The $90M in fix-and-flip loans was advertised as “a first of its kind” by the company.
The SEC said that to protect the reputation of Angel Oak’s securitization business it misled investors. The company was also trying to avoid early repayment to investors that would be triggered by loan delinquencies.
“Shortly after the [securitization] deal closed, loan delinquency rates increased unexpectedly,” the SEC alleges.
Negandhi and Angel Oak “artificially reduced delinquency rates,” the SEC claims. That was accomplished by diverting funds being held for borrowers to complete property renovations and redirecting them to “instead pay down outstanding loan balances.”