Pitt is New Deputy Attorney

The former chairman of the Securities and Exchange Commission, Harvey Pitt, was named as deputy attorney general of Alabama on August 19. Pitt is being brought on as Alabama is investigating “short sellers and false rumors involving Colonial BancGroup, actions designed to drive down the institution’s stock price,” according to The New York Times.

Colonial is based in Montgomery and is one of the worst performing bank stocks in the country, having lost 53 percent of its value.

Colonial CEO Robert Lowder said in a conference last month that the bank plans on holding on to most of the foreclosed properties indefinitely, rather than sell them around half of what the bank lent.

It sold 43.7 million shares at $8 in April and the stock has since declined to $6.31. The number of shares outstanding rose to 202 million, with 74.3 million of them being sold short, according to the NYTimes. The company has been on the Regulation SHO list which displays stocks with a large number of failures to deliver shares at settlement. They failed to deliver for 37 days, which now indicates that there was naked shorting. Naked shorting is when a speculator sells a stock short without borrowing it.

Pitt will not be paid for his services.