SEC Charges Santander Consumer for Accounting and Internal Control Failures

ADMINISTRATIVE PROCEEDING
File No. 3-18932

December 17, 2018 – The Securities and Exchange Commission announced today that Santander Consumer USA Holdings Inc., a publicly-traded issuer of subprime automobile loan securitizations, has agreed to settle charges stemming from its accounting for troubled subprime loans.  

According to the SEC’s order, for at least eight reporting periods, Santander Consumer failed to calculate and report its credit loss allowance for certain impaired loans in accordance with Generally Accepted Accounting Principles.  Santander Consumer failed to segregate the impaired loans when calculating its credit loss allowance, and improperly grouped the loans with the rest of its loan assets when evaluating them for impairment.  The SEC’s order also found that Santander Consumer’s flawed internal accounting controls relating, in part, to the calculation of its loss allowance and its overall control environment contributed to the errors that led Santander Consumer to restate its financial statements two separate times in one year.  The errors impacted every periodic report and earnings release filed by Santander Consumer from the time of its initial public offering in January 2014 until it filed its second restatement in late 2016.

The SEC’s order found that Santander Consumer violated reporting, books and records, and internal accounting control provisions of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Securites Exchange Act of 1934 and Rules 12b-20, 13a-1, 13a-11, and 13a-13 thereunder.  Without admitting or denying the findings, Santander Consumer agreed to pay a civil penatly of $1.5 million.

The SEC’s investigation was conducted by Amy Sumner, Dee Raibourn, and Sharon Bryant of the Complex Financial Instruments Unit and Tracy Bowen of the Denver Regional Office.  The investigation was supervised by Laura Metcalfe and Daniel Michael of the Complex Financial Instruments Unit.