Monday, April 02, 2007

Fremont AND LEND auditor resigns

From yahoo finance:

On March 27, 2007, Grant Thornton LLP ("Grant Thornton") advised Fremont General Corporation (the "Company") that Grant Thornton is resigning from its position as the Company's independent registered public accounting firm.

On August 8, 2006, the Company's Audit Committee engaged Grant Thornton as the Company's independent registered public accounting firm for the fiscal year ended December 31, 2006. Grant Thornton had not previously audited the financial statements of the Company or any of its subsidiaries for any prior period. Since Grant Thornton's engagement, (i) there has not been any matter that was the subject of a disagreement (as described in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) between the Company and Grant Thornton and (ii) no "reportable event" (as defined in Item 304(a)(1)(v) of Regulation S-K) has occurred.

Grant Thornton has taken the position that, in light of the Company's current operating environment and the industry in which it operates, that they needed to expand significantly the scope of their audit. Grant Thornton had asked for additional information in connection with its audit beginning in the latter part of February and stated at that time that it needed to perform additional procedures and testing in connection with completing its audit. At no time did the Company either fail to provide to Grant Thornton any requested information on a timely basis or communicate to Grant Thornton that it was opposed to any additional procedures or testing or that it was opposed to such an expanded audit scope. The Company repeatedly has requested that Grant Thornton complete its audit and did not at any time seek to place any limitations on Grant Thornton in connection with the audit.



UPDATE:

U.S. Securities and Exchange Commission\
Office of the Chief Accountant
100 F Street, NE Washington, DC 20549
Re: Fremont General Corporation File No. 001-08007

Dear Sir or Madam:

We have read Item 4.01 of Form 8-K of Fremont General Corporation dated March 27, 2007. We believe it should be supplemented and, in part, amended as follows.

We believe that our communications to the Company as described in the third paragraph is a “reportable event” as described in to Item 4.01 of Form 8-K in accordance with Item 3.04(a)(1)(v)(C)(1)(i). Additionally, we communicated to the Company that in addition to its current operating environment and industry conditions, there were other significant events that have occurred at the Company that were a factor in our determination to expand the scope of our audit.

The third paragraph also notes that “...at no time did the Company either fail to provide to Grant Thornton any requested information on a timely basis....”. During the course of the audit there were instances where the Company did not provide certain requested information to Grant Thornton on dates previously agreed upon with management. Additionally, as we resigned prior to completion of the audit, we are unable to evaluate or determine the completeness, sufficiency or timeliness of the information provided in response to our requests.

Very truly yours, GRANT THORNTON LLP (signed manually)"


UPDATE #2:

On March 27, 2007, Grant Thornton LLP (“Grant Thornton”), the registered independent public accounting firm for Accredited Home Lenders Holding Co. (the “Company”), verbally advised the Company and the Audit Committee of the Board of Directors of the Company (the “Audit Committee”) of its resignation as the Company’s independent auditors. Grant Thornton further advised that it declined to complete the audit of the Company’s financial statements for the year ended December 31, 2006. On March 30, 2007, Grant Thornton provided the Audit Committee with a letter dated March 27, 2007 regarding its resignation as the Company’s independent auditors. A copy of that letter is attached as Exhibit 16.1 hereto.

The Audit Committee did not request or approve the resignation of Grant Thornton. The Audit Committee has voluntarily reported Grant Thornton’s resignation to the SEC. In addition, the Audit Committee is reviewing the circumstances relating to Grant Thornton’s resignation. The Audit Committee has begun the process of searching for a new registered public accounting firm and will file a Current Report on Form 8-K upon the engagement of a new auditing firm. No assurance can be given as to when a new auditing firm might be selected.

Grant Thornton’s audit report on the Company’s consolidated financial statements as of and for the year ended December 31, 2005 did not contain an adverse opinion or disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope, or accounting principles.

SEC filing

5 comments:

BPLI said...

Crsipy - This is fascinating to say the least and I have not seen anyone on this. Let's see, NEW, LEND, FMT were all not allowed to post their financials by their auditors and now this resignation. It is likely that Grant felt both LEND and FMT were insolvent. This has big implications, particularly for FMT where a FDIC takeover and depositor bailout looks more likely soon. I would have to go back through the Cease and Desist order from the FDIC, but I am guessing this violates that order, at least the spirit of the order based upon Grant's response to Fremont's lies.

Bakersfield Bubble said...

This is big news, I would expect this was not "priced into" the stocks and we will see some serious down action tommorow.

BPLI said...

We will definitely see it in FMT, but I question on LEND. For one thing Grant looks like it resigned from both on the same day so some might thing it was an industry issue? Also, they called FMT liars, i don't think they went that far with LEND and it appears that LEND was able to secure some more financing (maybe the same fools that were giving new century financing to the end). The FDIC should just seize FMT and put them out of their misery! Not a chance that FMT finds another auditor. Delisting!!!

Bakersfield Bubble said...

"Also, they called FMT liars"

Agree!

Anonymous said...

In general, anything that was formerly a really hot market is "now a buyer's market," says Bernard Markstein, senior economist with the National Association of Home Builders. In some parts of the West, building restrictions and natural boundaries keep inventory low, which helps keep prices moving upward.

"L.A. proper is in good shape," but areas like Riverside and Bakersfield have seen "overbuilding," says Markstein."

http://biz.yahoo.com/brn/070402/21067.html?.v=1&.pf=loans