SEC Charges Angel Oak Capital Advisors with Misleading Investors in $90 Million Fix-and-Flip Securitization

The Securities and Exchange Commission today charged Atlanta-based Angel Oak Capital Advisors, LLC and its portfolio manager Ashish Negandhi for misleading investors about the firm’s fix-and-flip loan securitization’s delinquency rates. Angel Oak and Negandhi have agreed to settle charges and pay a penalty of $1.75 million and $75,000, respectively. According to the SEC’s order, in March 2018, Angel Oak 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. The deal included a provision that would accelerate Angel Oak’s obligation to return funds to certain investors if delinquencies reached a pre-defined threshold.