Mexico-Based Homex Reaches Settlement with the SEC

The Daily Journal
March 2017

The Daily Journal interviewed Stradling shareholder Kathleen Marcus, co-chair of the Enforcement Defense & Investigations practice group and chair of the Compliance & Corporate Governance practice group, for an article about Desarrolladora Homex, a prominent Mexico-based homebuilding company, accused of falsely reporting the sale of more than 100,000 homes to boost company revenues. Without denying or admitting the allegations, the company reached a settlement with the SEC on March 5. In written comments to the Daily Journal, Marcus, a former SEC enforcement attorney, explained that although the consequences of accounting fraud are generally severe, they may have been mitigated in this case due to the fact that Homex’s “management cooperated with the investigation and appear to have negotiated some leniency for the entity with the SEC. While they are barred from offering securities, the SEC did not sanction them with a penalty.”