Former IndyMac CEO Settles SEC Fraud CaseMonday, October 1, 2012
Michael Perry, the former head of failed mortgage lender IndyMac Bank, has reached a settlement with the Securities and Exchange Commission in a civil fraud case related to the thrift’s collapse.
Under an agreement announced Monday, just weeks before the fraud case was set to go to trial, Perry will pay a monetary penalty of $80,000 but did not admit or deny wrongdoing.
The SEC filed a lawsuit last year in U.S. District Court in Los Angeles against Perry, who had been chief executive and chairman of IndyMac. He was accused of hiding the Pasadena thrift’s deteriorating financial condition prior to its July 2008 failure and failing to disclose details about efforts to raise capital.
But the SEC’s case had been whittled down in recent months as U.S. District Judge Manuel Real dismissed all but one claim.
The remaining issue revolved around disclosure requirements related to IndyMac’s capital position in the first quarter of 2008. The SEC claimed Perry had a duty to disclose to investors that IndyMac maintained its well-capitalized status only by backdating a capital infusion; Perry’s lawyers said the move was authorized by regulators and therefore was merely an accounting maneuver.
In a statement Monday, D. Jean Veta, Perry’s attorney, said the executive wanted to “put the matter behind him” despite winning favorable judgments on claims of fraud.
“The court ruled in Mr. Perry’s favor on every claim that was presented to it,” Veta said. “Despite significant reluctance, Mr. Perry had long tried to resolve this case on reasonable terms. It just so happens that we needed to score some victories before the SEC was of a similar mind.”
Spun out of Countrywide Financial Corp., IndyMac had become one of the nation’s largest independent mortgage lenders prior to the housing bust. The institution specialized in so-called Alt-A loans for borrowers with less-than-perfect credit.
But as the housing market started to falter, IndyMac’s losses began piling up and it suffered a liquidity crisis during a bank run in July 2008, prompting regulators to seize the thrift. Its assets were later sold to a group of investors who renamed the institution OneWest Bank.
Perry has remained out of the spotlight since the failure, but he recently launched a website, NotTooBigToFail.org, that he has used to defend himself against accusations that he failed in his duties as leader of IndyMac.
The settlement comes about three months after Perry settled class-action securities lawsuit for $6.5 million. The latest case had been set to go to trial Oct. 23.