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SEC investigates NextCard

The SEC has subpoenaed the company for documents and launched a formal probe, said NextCard, which formerly issued credit cards over the Internet.

NextCard is under investigation by the Securities and Exchange Commission, the company said Friday.

The SEC has subpoenaed NextCard for documents and launched a formal investigation, the company said in a regulatory filing. The commission notified it of the probe on Wednesday, said NextCard, which formerly issued credit cards over the Internet.

"(NextCard) intends to comply with the subpoena and to cooperate fully with the commission to the best of its ability," the company said in its regulatory filing. The filing did not say what the SEC is investigating.

SEC representatives did not return calls seeking comment about the investigation.

Separately, NextCard said in its filing that John Hashman, the company's chief executive officer, resigned, effective Sept. 3. Hashman gave the company notice of his resignation last month; the company's board of directors accepted it this week, NextCard said.

The company's General Counsel Bob Linderman declined to comment on the investigation or on Hashman's resignation.

"The filing speaks for itself," he said.

The company did not say who will replace Hashman.

In February, federal banking regulators shut down NextBank--the bank that NextCard operated--and took over its accounts after the bank said a liquidation of all its assets would not raise enough money to pay off its existing liabilities. The move ended NextCard's major line of business: issuing credit cards over the Internet.

Unable to find a buyer for some 800,000 NextCard accounts, the Federal Deposit Insurance Corporation closed the accounts last month and deactivated the credit cards attached to them. The FDIC has estimated that the closure of NextBank will cost the agency between $300 million and $400 million.

NextCard was once a high-flying dot-com company. Launched in 1997, it was attempting to revolutionize credit card issuing by doing it entirely over the Internet.

The company teamed up with e-commerce giant Amazon.com in 1999 to create a co-branded credit card. Amazon invested $22.5 million in the company.

But like other dot-com companies, NextCard bled cash, accumulating $390.2 million in losses by the end of last year. By last fall, the company was searching for a buyer.

The company's stock has plunged from a high of more than $50 per share in 1999 to 2 cents on Friday.