New Century Says U.S. SEC Opens Probe, Seeks Papers (Adrian Cox)

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New Century Financial Corp., the second-biggest U.S. subprime mortgage lender, said the Securities and Exchange Commission opened an investigation amid speculation that the company is on the verge of bankruptcy.

By Adrian Cox

March 13 (Bloomberg) -- New Century Financial Corp., the second-biggest U.S. subprime mortgage lender, said the Securities and Exchange Commission opened an investigation amid speculation that the company is on the verge of bankruptcy.

The U.S. regulator contacted New Century on March 12 to say it was ``conducting a preliminary investigation involving the company and requesting production of certain documents,'' Irvine, California-based New Century said today in a regulatory filing.

``The staff of the SEC had also previously requested a meeting with the company to discuss the events leading up to the company's previous announcement of the need to restate certain of its historical financial statements,'' it said. ``The company intends to cooperate with the requests of the SEC.''

New Century said it doesn't have the cash to pay creditors that are demanding that the company repurchase all outstanding mortgage loans they financed. It added lenders such as Barclays Plc and UBS AG to a list published yesterday that included Morgan Stanley, Citigroup Inc. and Goldman Sachs Group Inc.

The value of repurchase obligations with Zurich-based UBS, the biggest Swiss bank, was $1.5 billion as of March 9, New Century said today. The bank said it won't renew a servicing arrangement with New Century due to expire on April 2 and demanded access to documentation about mortgage loans financed under the agreement, New Century said.