U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21431 / March 3, 2010
SEC v. American Equity Investment Life Holding Company, David J. Noble, and Wendy C. Waugaman, Civil Case No. 4:10-CV-87, USDC, S.D. Iowa
SEC Charges American Equity Investment Life Holding Company, David Noble, and Wendy Waugaman in Connection With Misleading Disclosure of Related Party Transaction
The Securities and Exchange Commission ("SEC") announced that on March 3, 2010, it charged David Noble of Longboat Key, Florida, Wendy Waugaman of Waukee, Iowa, and American Equity Investment Life Holding Company ("American Equity"), based in West Des Moines, Iowa, in connection with misleading disclosure of a related-party transaction in American Equity's 2006 proxy statement. Noble is the founder, Chairman, and former Chief Executive Officer of American Equity, a full service underwriter of fixed annuity and life insurance products through its wholly-owned life insurance subsidiaries. Waugaman is American Equity's current Chief Executive Officer and former Chief Financial Officer and General Counsel.
The SEC's complaint, filed in federal court in Des Moines, alleges that in September 2005, American Equity acquired, for $1, American Equity Investment Service Company, a financing company wholly-owned by Noble. The complaint alleges that this acquisition conferred significant benefits on Noble, which Noble, Waugaman, and American Equity inadequately disclosed. The complaint alleges that, among other things, American Equity disclosed that, immediately prior to the acquisition, Noble received a $2.5 million distribution from the acquired company, but American Equity did not disclose that the acquired company had a large deficit at the time of the distribution. The complaint further alleges that American Equity's acquisition of Noble's company effectively relieved Noble of substantial potential personal liability for the acquired company's debts. According to the complaint, American Equity's 2006 proxy statement disclosure about the acquisition was materially misleading because it failed to fully disclose these financial benefits to Noble. The complaint also alleges that American Equity's proxy statement disclosure relating to Noble's compensation, which described Noble as modestly compensated and unwilling to accept additional salary or bonus, was materially misleading in light of the significant benefits he received from American Equity's acquisition of the company owned by Noble.
American Equity, Noble, and Waugaman settled the charges without admitting or denying the allegations of the SEC's complaint. Under the settlement, Noble, Waugaman, and American Equity agreed to be permanently enjoined from committing future violations of the provisions of the federal securities laws that prohibit materially false or misleading statements or materially misleading omissions in proxy statements. Additionally, Noble will pay a $900,000 penalty and Waugaman will pay a $130,000 penalty. American Equity has also agreed to certain undertakings in connection with the settlement.
See Also: SEC Complaint