U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23218 / March 12, 2015
Securities and Exchange Commission v. Edward J. Woodard, et al., Civil Action No. 2:13cv16
SEC Settles Civil Action Against Former CFO of Failed Norfolk, Virginia Bank of the Commonwealth
The Securities and Exchange Commission announced today that on March 12, 2015, the Honorable Mark S. Davis of the United States District Court for the Eastern District of Virginia entered a final judgment against Cynthia A. Sabol, the former CFO of Norfolk, Virgina-based Bank of the Commonwealth and its publicly-traded holding company, Commonwealth Bankshares, Inc. Sabol consented, without admitting or denying the allegations in the Commission's complaint, to the entry of the final judgment that permanently enjoined her from violating Section 17(a) of the Securities Act of 1933 (the "Securities Act"), Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 (the "Exchange Act") and Rules 10b-05, 13a-14, 13b2-1 and 13b2-2 thereunder, and from aiding and abetting violations of Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1, 13a-11 and 13a-13 thereunder, and imposed a five-year officer and director bar and a civil penalty in the amount of $55,000. Based on the injunctions entered against Sabol, the Commission subsequently entered an order suspending Sabol from appearing or practicing before the Commission as an accountant with a right to apply for reinstatement after five years. The court's entry of the proposed final judgment resolved this litigation in its entirety.
The Commission's complaint alleged that Sabol violated the antifraud, reporting, recordkeeping, internal controls, deceit of auditors, and Sarbanes-Oxley certification provisions of the federal securities laws by engaging or providing substantial assistance in the understatement of Commonwealth's allowance for loan and lease losses (known as ALLL), reported loss before income taxes, and real estate repossessed by the bank (known as OREO).
The Commission's complaint also charged two other former Commonwealth executives - Edward J. Woodard, Jr., the former CEO, president and chairman of the board, and former executive vice president Stephen G. Fields. The Commission previously reached settlements with Woodard and Fields, who were convicted in a separate criminal trial and each sentenced to substantial jail terms. Pursuant to the terms of their settlements with the Commission, Woodard and Fields each were enjoined from violating Sections 10(b) and 13(b)(5) of the Exchange Act, and Rules 10b-5 and 13b2-1 thereunder, and from aiding and abetting violations of Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1, 13a-11 and 13a-13 thereunder and permanently barred from serving as an officer or director of a public company. Woodard also was permanently enjoined from violating Section 17(a) of the Securities Act and Exchange Act Rules 13a-14 and 13b2-2.
The Commission's litigation was led by Richard Hong, Assistant Chief Litigation Counsel, and David S. Karp, Senior Counsel. The Commission thanks the U.S. Attorney's Office for the Eastern District of Virginia for its assistance in this matter.