Move from Pacific Exchange could lead to state oversight
Metropolitan Mortgage & Securities Inc. announced Tuesday that it has asked to be delisted from the Pacific Exchange, a move that may put the company under the regulatory regime of the Washington state Securities Division.
Metropolitan initially listed its unsecured debenture bonds on the Pacific Exchange in 1999 - essentially ending years of state oversight, state securities chief Deborah Bortner said in an interview last month.
As regulator prior to the exchange listing, the state had kept a watchful eye on the company’s debt load.
But congressional passage of the National Securities Markets Improvement Act freed Metropolitan to list its notes on the Pacific Exchange and shed state oversight, Bortner said.
Once on the exchange, Metropolitan’s debt load grew under the more relaxed regulation.
The company now has 35,000 investors and debts of about $580 million.
On Jan. 12, the Pacific Exchange suspended the trading of Metropolitan notes along with those of its sister company, Idaho-based Summit Securities Inc. The exchange announced it was determining whether to delist the companies.
That action followed the company’s failure to pay interest and dividends, a move that prompted investors to file lawsuits last week that may turn into class-action claims.
Late last year, the American Stock Exchange suspended trading of Metropolitan’s and Summit’s preferred stock and announced delisting procedures had begun.
Also Tuesday, Metropolitan announced that Samuel Smith, former president of Washington State University, had resigned from the board of directors, effective Jan. 23.
He did not provide a resignation letter, according to the company.
Smith, who lives in the Seattle area, could not be reached for comment and did not return a phone message by Tuesday evening.
Metropolitan’s financial troubles were punctuated last week when Ernst & Young LLP quit as independent auditor.
The auditing firm said senior managers at Metropolitan had misrepresented facts and did not disclose all relevant information.
The firm sought to distance itself from the Metropolitan companies by disavowing earlier audits covering fiscal years 2001, 2002 and the first nine months of fiscal 2003.
Metropolitan was to have released its 2003 year-end results next month. That is now unlikely in the wake of Ernst & Young’s resignation.