Angel Oak Capital Advisors Lied to Investors, SEC Takes action

324
SHARE

By doing this, Angel Oak was able to prevent an early amortization from taking place. Had Angel Oak not engaged in these illicit practices, the early amortization trigger would have been breached in November 2018, thereby requiring early repayment of the investment principal to senior tranche noteholders.

Throughout the period of the securitization, Angel Oak disseminated performance information data to noteholders, through monthly reports prepared by the securitization’s trustee, which disclosed, among other things, the delinquency rates on the mortgages in the securitization pools as well as the securitization’s compliance with the early amortization trigger.

Angel Oak, however, did not disclose to noteholders that it had used funds held in escrow in Loans in Progress (LIP) accounts to mitigate loan delinquencies, or that, but for the use of such funds, an early amortization would have been triggered. As a result, Angel Oak’s statements that were incorporated in the monthly trustee reports regarding delinquency rates and its compliance with the early amortization trigger were materially false and misleading.