U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 22121 / October 11, 2011

Accounting and Auditing Enforcement Release No. 3327 / October 11, 2011

Securities and Exchange Commission v. Thomas S. Wu, Ebrahim Shabudin, Thomas T. Yu, and Craig S. On, Civil Case No. CV-11-4988 LB (N.D. Cal.)

SEC CHARGES BANK EXECUTIVES WITH HIDING MILLIONS OF DOLLARS OF LOSSES DURING 2008 FINANCIAL CRISIS

The Securities and Exchange Commission today charged former bank executives with misleading investors about mounting loan losses at San Francisco-based United Commercial Bank during the height of the financial crisis in 2008 and 2009. The SEC alleges that the bank's former Chief Executive Officer, Thomas Wu, Chief Operating Officer Ebrahim Shabudin, and senior officer Thomas Yu concealed losses on loans and other assets from the bank's auditors, causing the bank's public holding company UCBH Holdings, Inc. (UCBH) to understate 2008 operating losses by at least $65 million (approximately 50 percent). A few months later, continued declines in the value of the bank's loans led the bank to fail, and the California Department of Financial Institutions closed the bank and appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. United Commercial Bank was one of the 10 largest bank failures of the recent financial crisis, causing a loss of $2.5 billion to the FDIC's insurance fund.

In a complaint filed in federal court in San Francisco, the SEC alleges that Wu, Shabudin, and Yu deliberately delayed the proper recording of loan losses, and that each committed securities fraud by making false and misleading statements to investors and UCBH's independent auditors. During December 2008 and the first three months of 2009 as the company prepared its 2008 financial statements, Wu, Shabudin, and Yu were aware of significant losses on several large loans. Among other things, these executives allegedly learned about dramatically reduced property appraisals and worthless collateral securing the loans, yet they repeatedly hid this information from UCBH's auditors and investors.

The SEC's complaint also alleges that the bank's former Chief Financial Officer Craig On acted negligently by misleading the company's outside auditors and aiding the filing of false financial statements. On agreed to settle the SEC charges without admitting or denying the allegations. He will be permanently enjoined from violating certain antifraud, reporting, record-keeping, and internal controls provisions of the federal securities laws and will pay a $150,000 penalty. On also consented to an administrative order suspending him from appearing or practicing before the SEC as an accountant, with a right to apply for reinstatement after five years.

The SEC's complaint charges Wu with knowingly violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 (Securities Act) and Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder. The complaint charges Shabudin and Yu with knowingly violating Sections 17(a)(1) and 17(a)(3) of the Securities Act and Section 10(b) and Rule 10b-5 of the Exchange Act. Wu, Shabudin, and Yu are charged with aiding and abetting UCBH's violation of Section 10(b) and Rule 10b-5 of the Exchange Act. The complaint charges On with violating Sections 17(a)(2) and 17(a)(3) of the Securities Act. Each of the defendants is charged with aiding and abetting UCBH's violation of its periodic reporting requirements under Section 13(a) and Rules 12b-20, 13a-1, and 13a-11of the Exchange Act, aiding and abetting UCBH's violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act, and falsifying books and records and making false or misleading statements to auditors in violation of Exchange Act Rules 13b2-1 and 13b2-2. The SEC's complaint seeks permanent injunctive relief, a judgment barring Wu, Shabudin, and Yu from serving as officers or directors of any public company, and civil money penalties.

Cary Robnett, Lloyd Farnham, Michael Fortunato, Jason Habermeyer, and Cary Robnett of the SEC's San Francisco Regional Office conducted the SEC's investigation. The SEC's litigation will be handled by Lloyd Farnham and Robert Mitchell.

The SEC acknowledges the assistance of the FDIC, U.S. Attorney's Office for the Northern District of California, Federal Bureau of Investigation, Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), FDIC's Office of Inspector General, and Office of Inspector General for the Board of Governors of the Federal Reserve System.