Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Wednesday, March 3, 2010

SEC and American Equity Investment Settle Proxy Disclosure Charges

The SEC settled proxy disclosure charges against American Equity Investment Life Holding Company, an Iowa insurance company, and two executives, 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.

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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