SEC Charges Angel Oak Capital Advisors with Misleading Investors   

Angel Oak Capital Advisors to pay $1.75 Million in Civil Penalties  

According to a press release, on Aug. 10, 2022 the Securities and Exchange Commission charged Angel Oak Capital Advisors, LLC and its portfolio manager for allegedly misleading investors about the firm’s fix-and-flip loan securitization’s delinquency rates.   

In March 2018, Angel Oak allegedly raised $90 million through a first-of-its-kind securitization of loans made to borrowers for the purpose of purchasing, renovating, and selling residential properties, also known as “fix-and-flip” loans, which were originated by an Angel Oak-affiliated entity, according to the SEC’s order.   

The deal reportedly included a provision that would accelerate Angel Oak’s obligation to return funds to certain investors if delinquencies reached a pre-defined threshold. Soon after the deal closed, loan delinquency rates increased unexpectedly.  

Due to concerns about damage that may be done to the business from an early repayment, Angel Oak and its portfolio manager allegedly improperly diverted funds held to reimburse borrowers for renovations made to the mortgaged properties to pay down outstanding loan balances.   

Since these actions were allegedly undisclosed, the performance data that was shared with investors purportedly provided an inaccurate view of the actual delinquency rates on the mortgages in the securitization pool as well as the securitization’s compliance with the early repayment trigger.  

SEC rules require that firms provide investors with “full and accurate information regarding the performance of an investment, even after closing, to ensure the integrity of our markets.”  

Without admitting or denying the SEC’s findings, Angel Oak and its portfolio manager agreed to a cease-and-desist order, a censure, and civil monetary penalties of $1.75 million and $75,000, respectively.  

This information is all publicly available and provided to you by the White Law Group.  

 For a free consultation with a securities attorney, please contact the office of The White Law Group at 888-637-5510.   

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Seattle, Washington. For more information on the firm, visit www.WhiteSecuritiesLaw.com.