SEC Charges Executives of Iowa Insurance Company With Misleading Proxy Disclosures to Investors
FOR IMMEDIATE RELEASE
Washington, D.C., March 3, 2010 — The Securities and Exchange Commission today charged an Iowa insurance company and two executives with proxy disclosure violations, alleging that they inadequately disclosed details about the acquisition of another company and the resulting financial boon to the then-CEO.
The SEC alleges that American Equity Investment Life Holding Company's former CEO and current chairman David Noble and current CEO Wendy Waugaman (who was then CFO) helped cause the West Des Moines-based company to make misleading disclosures to investors in its 2006 proxy statement.
According to the SEC's complaint, filed in federal court in Des Moines, the company did disclose that immediately prior to its acquisition of a financing company wholly-owned by Noble, he received a $2.5 million distribution from the acquired company. However, the SEC alleges that American Equity did not disclose that the acquired company had a large deficit at the time of the distribution, and that this acquisition of Noble's company effectively relieved him of substantial potential personal liability for the acquired company's debts.
"The actions of these executives and their company denied shareholders their right to complete and accurate information about related party transactions," said Merri Jo Gillette, Director of the SEC's Chicago Regional Office. "Companies cannot make misleading and incomplete disclosures about transactions that financially benefit their top executives."
According to the SEC's complaint, American Equity acquired Noble's company for $1 in September 2005. The SEC alleges that American Equity's 2006 proxy statement disclosure about the acquisition was materially misleading because it failed to fully disclose the financial benefits to Noble from the acquisition. The SEC's 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 agreed to settle the charges against them 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 omissions in proxy statements. Additionally, Noble will pay a $900,000 penalty and Waugaman will pay a $130,000 penalty. American Equity also has agreed to certain undertakings in connection with the settlement.
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For more information about this enforcement action, contact:
Merri Jo Gillette
Director, SEC's Chicago Regional Office
Robert J. Burson
Senior Associate Director, SEC's Chicago Regional Office