On January 20, the SEC announced a settlement with a residential and commercial loan servicer for allegedly misstating its financial results for the last three quarters of 2013 and the first quarter of 2014, the consequence of “an internal accounting controls failure that caused the company to rely on a valuation methodology that did not conform to U.S. Generally Accepted Accounting Principles (GAAP).” According to the SEC, the servicer relied on a related party’s improper valuation of mortgage servicing rights that had been acquired from the servicer itself. In addition, the servicer falsely represented in its Form 10-K that it had policies, procedures, and practices to ensure that its Executive Chairman was recused from approving related party transactions when, in fact, it had no such written policies or procedures: “[A]lthough the Executive Chairman had a practice of recusing himself from negotiations and certain approvals of related party transactions, that practice was inconsistent and ad hoc.” Without admitting or denying the SEC’s findings, the servicer agreed to pay a $2 million civil money penalty to settle the charges.