The SEC has sued three top executives from former mortgage lender Indymac, claiming the trio defrauded investors by misrepresenting the company’s finances leading up to the mortgage crisis.
Federal complaints allege that the Pasadena, California-based lender sold $100 million in new stock while masking it’s inevitable decline from investors.
“These corporate executives made false and misleading disclosures about IndyMac at a time when the company’s financial condition was rapidly deteriorating,” said Lorin L. Reisner, Deputy Director of the SEC’s Division of Enforcement, in a release on the SEC’s website.
“Truthful and accurate disclosure to investors is particularly critical during a time of crisis, and the federal securities laws do not become optional when the news is negative.”
Specifically, the three execs failed to tell investors that the company had begun raising capital to protect its capital and liquidity positions, or that many of the loans it sold sold as mortgage-backed securities contained borrower misrepresentations (stated income loans).
One suit involves former Indymac CEO Michael Perry and CFO A. Scott Keys, while another complaint targets former CFO S. Blair Abernathy.
Abernathy settled without admission or denial of the claims, agreeing to pay roughly $125,000 in penalties.
Perry and Keys face similar penalties, along with permanent injunctive relief, an officer and director bar.
The Office of Thrift Supervision closed Indymac on July 11, 2008 and placed it under FDIC receivership, renaming it Indymac Federal, before it was eventually sold to investors and re-branded as OneWest Bank.
OneWest Bank looks like an Indymac in the making, with advertisements for jumbo mortgages sprouting up all around Los Angeles.
Kind of like PennyMac, whose team consists of 10 former Countrywide employees, which began originating mortgages recently as well.