WASHINGTON (Reuters) - The former chief executive of failed mortgage lender IndyMac Bancorp has agreed to pay $80,000 to resolve the remaining parts of a U.S. securities fraud case against him, after a federal court earlier this year had dismissed much of the case.
The settlement between Michael Perry and the Securities and Exchange Commission ends a long-running case that hinged on whether or not IndyMac’s top executives disclosed crucial information about the bank’s financial health at the onset of the 2007-2009 financial crisis.
The settlement, which was dated September 27 and announced by the SEC and Perry’s lawyer on Monday, resolves one claim about whether details about a capital contribution should have been disclosed in May 2008.
Perry settled without admitting or denying the charges.
California-based IndyMac, which specialized in a type of mortgage that often required minimal documentation from borrowers, was seized by banking regulators in July of 2008 as the financial crisis gathered steam.
Its failure cost the Federal Deposit Insurance Corp, which stands behind bank deposits, about $12.8 billion.
In the February 2011 lawsuit, the SEC accused Perry and former IndyMac finance chief Scott Keys of withholding negative forecasts and misleading investors in 2008 about the firm’s capital raising efforts as its financial condition worsened.
Although the SEC managed to win a small settlement in this case, the resolution has been an uphill battle for the agency as it continues trying to bring cases against executives for their conduct during the crisis.
In May, the federal judge in California overseeing the case dismissed claims based on five of seven securities filings at issue in the case.
That ruling effectively ended the case against Keys and U.S. District Judge Manuel Real gave an extensive explanation for siding with the defendants and rejecting many of the SEC’s allegations.
Last month the court again narrowed the SEC’s case against Perry when it ruled that additional IndyMac public disclosures had been accurate.
“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”, Perry’s lawyer D. Jean Veta said in a statement.
The SEC has had success in going after institutions for conduct tied to the financial crisis, and has extracted some $2.2 billion in penalties and other sanctions through mid-September, according to statistics on the SEC website.
But it has struggled in some of its cases against individuals. In July, for example, a federal jury found a former Citigroup Inc manager not liable of civil charges of misleading investors in certain mortgage investments.
The SEC case is Securities and Exchange Commission v. Michael W. Perry and A. Scott Keys, U.S. District Court for the Central District of California, No. 11-cv-01309.
Reporting By Aruna Viswanatha; Editing by Tim Dobbyn