Former IndyMac CEO Michael Perry Must Face $600 Million FDIC Loan Lawsuit
By Edvard Pettersson – Dec 15, 2011 12:01 AM ET
Michael Perry, the ex-IndyMac Bancorp Inc. (IDMCQ) chief executive officer, must face the Federal Deposit Insurance Corp.’s claims that caused more than $600 million in losses on mortgage loans that couldn’t be sold.
U.S. District Judge Otis Wright II in Los Angeles denied Perry’s request to dismiss the lawsuit. The judge disagreed with Perry’s argument that the so-called business-judgment rule protects corporate officers as well as directors from lawsuits over their decisions made on behalf of the corporation.
The “business-judgment rule does not protect officers’ corporate decisions,” the judge said in his Dec. 13 order, citing California legislative history.
The FDIC sued Perry in July, alleging that he acted negligently when he allowed IndyMac, once the second-largest U.S. independent mortgage lender, to generate and purchase $10 billion in risky loans to be sold in the secondary market in 2007. The market at that time had become unstable and illiquid and IndyMac wasn’t able to sell the loans, which caused the bank $600 million in losses, the FDIC said.
IndyMac was seized by regulators in July 2008 after a run by depositors left the Pasadena, California-based company strapped for cash. The Securities and Exchange Commission, in a lawsuit filed in February, accused Perry and two other former IndyMac executives of failing to warn investors of the bank’s deteriorating financial condition.
D. Jean Veta, a lawyer for Perry, didn’t immediately return phone and e-mail messages yesterday seeking comment on the ruling.
The case is FDIC v. Perry, 11-05561, U.S. District Court, Central District of California (Los Angeles).
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