SEC charges former IndyMac execs with fraud

Three former senior executives at the collapsed US bank IndyMac, whose collapse in July 2008 was a harbinger of an ever bigger banking crisis to come, were charged last night with securities fraud.

The Securities and Exchange Commission, Wall Street’s watchdog, said that former chief executive Michael Perry and two former chief financial officers, Scott Keys and Blair Abernathy, misled investors about the mortgage lender’s deteriorating financial condition.

The three executives regularly received internal reports about IndyMac’s deteriorating capital and liquidity positions in 2007 and 2008, but failed to ensure adequate disclosure of that information to investors as IndyMac sold millions of dollars in new stock, according to civil charges filed by the SEC.

“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,” said Lorin Reisner, deputy director of the SEC’s enforcement division.

IndyMac, based in California and heavily exposed to subprime mortgages and to the state’s ailing housing market, was the second biggest bank failure in US history at the time, and its collapse prompted scenes of panicking investors queuing to take their money out.