On August 18, the SEC announced that it filed a complaint against three former leaders of a Texas-based “subprime” auto lender, claiming that the defendants committed securities fraud by allegedly double-pledging hundreds of millions of dollars in auto loans to multiple asset-backed securities (ABS) offerings and warehouse lenders as part of a purported scheme preceding the company’s collapse. The complaint, filed in the U.S. District Court for the Southern District of New York, alleges that the defendants knowingly made false representations to investors that the company was financially healthy, despite knowing that the company faced significant liquidity constraints and funding struggles dating back to at least 2020 through the company’s bankruptcy in September 2025.

The SEC also alleged that the lender represented that the loans in the ABS collateral pools were “free and clear” of other liens while defendants purportedly knew that the loans were, or would be in the future, double-pledged (i.e., collateral pledged to two or more pools of subprime loans or loan facilities). The complaint alleges that defendants also manipulated loan metrics to make defaulted or non-paying loans appear current by applying fake payments through a fictitious entity, deceiving underwriters and investors. According to the complaint, more than $945 million associated with the ABS offerings were outstanding and payable to investors at the time of the company’s bankruptcy.

The complaint alleges the defendants’ conduct violated various provisions of the Securities Act and the Exchange Act prohibiting fraud, with one defendant being charged with control-person liability and all the defendants with aiding-and-abetting liability. The SEC seeks injunctive relief, disgorgement with prejudgment interest, and civil penalties against all the defendants. The SEC’s announcement also noted that parallel criminal charges against the three defendants were announced by the U.S. Attorney’s Office for the Southern District of New York in December 2025.