Puerto Rico lenders sink on accounting, SEC woes

Ｒｅｕｔｅｒｓ　By Jonathan Stempel

Business News & Financial News | Reuters

NEW YORK, Oct 26 (Reuters) - Shares of three major Puerto Rico lenders suffered double-digit declines on Wednesday as the U.S. Securities and Exchange Commission stepped up its examination of their accounting for mortgage loans.

Shares of Doral Financial Corp. (DRL.N: Quote, Profile, Research), the island's largest residential mortgage lender, fell as much as 27.1 percent to their lowest level since 2000. The company late Tuesday announced a formal SEC accounting probe, cut its common stock dividend by 56 percent, and said "new information" would cause it to delay past Nov. 10 the filing of an amended 2004 annual report.

Shares of First BanCorp (FBP.N: Quote, Profile, Research), the island's No. 2 bank, fell as much as 12.1 percent to their lowest level since 2003, and R&G Financial Corp. (RGF.N: Quote, Profile, Research), a financial services company, fell as much as 18.6 percent to their lowest since 2001. These companies have in the last week also announced formal SEC accounting probes, which gives the agency subpoena power.

All three companies are struggling with their accounting for mortgage loan sales, and had previously been the subject of informal SEC probes. Since August, the chief financial officer of each company has quit or was fired, and the chief executives of Doral and First BanCorp stepped down. PricewaterhouseCoopers audits the companies' financial statements.