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SEC Sues in IndyMac Collapse

Regulators sued failed IndyMac Bancorp Inc.’s former chief executive and two other executives on Friday, accusing them of misleading investors about the Pasadena mortgage lender’s poor financial condition prior to its 2008 collapse.

Former Chief Executive Michael Perry and former chief financial officers Scott Keys and Blair Abernathy were named in the suit filed in U.S. District Court in Los Angeles by the U.S. Securities and Exchange Commission.

The SEC specifically cited “false and misleading statements” about IndyMac’s financial conditions in the 2007 annual report by the thrift’s holding company and in materials promoting the sale of $100 million in new stock to investors in 2008. Prior to its seizure, IndyMac was a leading maker of high-risk mortgages that required only minimal documentation from borrowers.

As late at February 2008, IndyMac was projecting that it would return to profitability and be able to pay preferred dividends without having to raise new capital. But the SEC contends Perry and Keys actually had begun raising new capital to shore up the company’s capital and liquidity positions. Abernathy, who replaced Keys as CFO in April 2008, was accused of making similar misstatements in later stock offering documents.

Abernathy has agreed to settle the SEC’s charges without admitting or denying the allegations. He will pay a $100,000 penalty, $25,000 in disgorgement of ill-gotten gains and $1,592 in prejudgment interest, said the agency, which is still pursuing its case against Perry and Keys.

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