Risk & Compliance

SEC Looks at Calpine, National City

Unrelated studies by the agency are reported by the companies, with Calpine's involving internal controls and National City's having to do with the...
Stephen TaubAugust 11, 2008

Two companies, power producer Calpine Corp. and financial services company National City Corp., disclosed in regulatory filings that they are targets of unrelated probes by the Securities and Exchange Commission.

Calpine said it had been contacted by the SEC and had had meetings with the SEC staff regarding its financial statements and internal control over financial reporting as well as those of CalGen, a wholly owned subsidiary. Calpine said that it is cooperating with the SEC, and has voluntarily provided information in response to the regulator’s requests.

It noted, however that a negative outcome of the investigation could require the company to pay fines or penalties, or satisfy other remedies under various provisions of the US securities laws, and could have a material impact.

At Cleveland-based National City, the company said in a filing that on June 30 it had been notified that it is a target of an informal investigation by the SEC’s Chicago regional office. It said the SEC had requested that National City provide certain documents concerning its loan underwriting experience, dividends, bank regulatory matters and the sale of First Franklin Financial Corp. National City sold subprime lender First Franklin to Merrill Lynch in 2006.

“The SEC has not asserted that the company has acted improperly or illegally,” National City said, adding that it intends to cooperate with the agency. National City said that the scope or outcome of the matter cannot be determined.